UNION BUDGET EXPECTATION 2019-Post-Budget Quote
Post-Budget Quote from Kalyan Jewellers:
“We are looking at this budget positively as the multiple reforms introduced clearly indicates that the Government is looking at laying the ground to fuel up the growth across sectors through relief offered to the consumers across sectors. Budget 2019 lays the foundation for a strong path towards India becoming a USD 5 trillion economy. The inter changeability of Aadhar and PAN card will help consumers tremendously when it comes to purchasing luxury items like jewellery.
With an investment of Rs.100 lakh crore proposed for infrastructure, we are expecting a bright future for the infra sector which in turn will benefit us as consumers will have more disposable income and the gems and jewellery industry presents itself as a lucrative investment option with profitable returns. Also, the assurance in the Budget to merge NRI and FPI (foreign portfolio investor) routes for investing in India to increase NRI funding will bring in fresh flow of capital in the economy which is a sign of good days to come.
However, the increase in customs duty on import of gold from 10% to 12.5% may affect short term sentiments on gold buying, and lead to an increase in the illegal supply of gold in the market. Overall, the reforms in the budget are mostly aligned towards strengthening Government’s schemes like Make in India, Swacch Bharat Abhiyan, Digital India and ease of doing business in the country”
Ashok P. Hinduja, Chairman, Hinduja Group of Companies (India): “NDA 2.0 has presented a budget that places India on a virtuous cycle of long term growth aiming to achieve the $5 trillion economies. Government measures to address liquidity issues in the financial sector would help boost credit growth, are timely and will spur economic activity.
It is heartening to see the finance minister focusing on providing depth to the bond market and the move to allow FIIs and FPIs to invest in debt securities will provide the much needed impetus to make available long term finance for infrastructure development. The marginal income tax level is now hitting historical highs, since last three decades which may militate against wealth creation.
Plans to enhance foreign direct investment in aviation, insurance, and media, allowing social enterprises to list on the stock exchange are some of the interesting announcements. Now it’s to be seen how these and other policy announcements are rolled out on the ground.”
Statement by Mr. Anil Gupta, CMD of KEI Industries Ltd on the Budget2019
‘We would appreciate development centric forward-looking budget, which will impact every household of the country and industry will witness a new horizon of development. The maiden Budget has laid special emphasis on the much awaited infrastructural development where the Government will invest Rs 100 Lakh crores in this segment for the next five years. The power sector has seen phenomenal growth achieving the electrification of almost 96% of households in the last 5 years. This large growth in the sector can be attributed to the infrastructure boom in India creating more avenues for companies like ours. Investments in railways, housing and farm are paramount to overall infra-growth for our company. The Government is also planning to invest 50 Lakh crores for Railways which will further boost the demand resulting in expansion of our business. Furthermore, the Government has shed light on the plan of One nation, One Grid & the Pradhan Mantri Gram Sadak Yojna will be a standalone element in ensuring power connectivity at affordable rates.’
Quote – Zarin Daruwala, CEO, India, Standard Chartered Bank said, “The Budget lays down a vision for the next five years while staying rightly focussed on completion of the already initiated policy changes. It also signals the government’s commitment to fiscal consolidation. The steps to shore up the financial sector via PSU bank recapitalization, partial credit support to financially sound NBFCs and change in regulator for HFCs are key positives, in my view. The measures to serve the interest of various sectors – MSMEs, affordable housing and underprivileged segments like retail traders – are much needed and welcome. The announcements like further liberalization of the foreign investment regime, issuance of sovereign Dollar bonds, deepening of long-term bond markets, rationalization of labor laws, focus on infrastructure investment are steps in the right direction. On balance, the Budget would help boost the medium-term growth potential of the economy.”
On behalf of Sampath Reddy, CIO, Bajaj Allianz Life:
Overall, the budget has tried to reach out to various sections of the society and has been a balanced and forward-looking one—promoting ease of living. It has focused on segments like digital economy and infrastructure. Also there has been a focus on promoting Electric Vehicles with large benefits.
For infrastructure, the government intends to provide Rs. 100 lakh crore over the next 5 years, which may help to revive the investment cycle. For the financial sector, PSU bank recap of Rs. 70,000 crore has been provided (which is above expectations), and also announced various measures for the NBFC sector, which may reduce the stress in the sector in the near term. For the digital economy, the government wants to promote digital transactions and cash-less economy, by imposing 2% TDS on cash withdrawals above Rs 1 crore per year from a bank account, no transaction costs or merchant discount rate on various digital modes of payment; and finally also using the digital medium to increase tax compliance.
From a markets perspective, the government’s proposal to increase the minimum free float (public shareholding) limit from 25% to 35%, can lead to an increase in supply of equity paper in the markets. On the positive side, the government has maintained fiscal discipline (announced fiscal deficit target of 3.3% for FY20 vs 3.4% earlier, and plans to reduce it to 3.0% by FY22), announced intent for foreign sovereign government borrowings, which has benefited the bond markets.
On the taxation front, the government has extended the lower corporate tax rate of 25% for companies having an annual turnover up to Rs. 400 crore (compared to Rs. 250 crores before), and this was along expected lines. However, the increase in the effective tax rate on high net worth individuals (those earning more than Rs. 2 crore annually), and especially for the super-rich (those earning Rs. 5 crores and above annually)—where effective tax rate has been increased by 7%, has been a surprise move.
On the taxation front, the government has extended the lower corporate tax rate of 25% for companies having an annual turnover up to Rs. 400 crore (compared to Rs. 250 crores before), and this was along expected lines. However, the increase in the effective tax rate on high net worth individuals (those earning more than Rs. 2 crores annually), and especially for the super-rich (those earning Rs. 5 crores and above annually)—where effective tax rate has been increased by 7%, has been a surprise move.