Hemant Kanoria, Chairman and Managing Director, Srei Infrastructure Finance
“This year's budget has primarily focused on three key sectors namely agriculture, healthcare and infrastructure. The proposed plan of the government to provide 10 crore poor and under-privileged people with a medical treatment coverage of up to Rs 5 lakh is indeed a laudable step which will alleviate the problem of the poor to a very large extent as healthcare has always been a problem for most of the population. When the general election is just a year away and there are telltale signs of rural distress from certain pockets, it is logical that the budget would try and address the concerns of the rural sector. A wide array of steps has been announced ranging from enhanced MSP for Kharif crops, upgradation of Rural Haat-s to enable small and marginal farmers to sell directly to bulk purchasers and consumers, expansion of rural infrastructure, enhanced outlay for irrigation and adoption of cluster model for horticulture. All these augur well for the rural sector. In addition, allocation of funds for fishery, aquaculture, animal husbandry, dairy farming, agro-logistics services, extension of crop loans to lessee cultivators and schemes like National Bamboo Mission can fuel entrepreneurship at the rural level. I welcome the setting up of an Agri-Market Infrastructure Fund with a corpus of Rs 2,000 crore. The decision to set up 42 Mega Food Parks can provide fillip to the agro-processing industries, however there is not much clarity on how the government intends to build those – on its own or in collaboration with private sector. In infrastructure sector, two areas of focus have been roads and railways. The envisaged investment of Rs 5.35 lakh crore (for Phase I of Bharatmala programme) for roads and capex of Rs 1.46 lakh crore for railways will assist in providing the momentum to the economy. It will also result in growth for construction equipment manufacturing companies, construction companies and contractors and infrastructure financing institutions involved in supporting these sectors. Overall, it will have a tremendous boost on employment generation as construction happens to be the second largest employment generator after agriculture. Another laudable step taken by the government is to develop the corporate bond market and the amendments proposed in the stamp duty structure. It is quite important to develop the capital market which has been our request for the last few years in order to bring more depth into the debt capital market. There are certain steps to be taken so that the conceptual thinking of the government can be converted into implementable actions. One of the most important areas to be addressed is to enable, facilitate and encourage Pension Funds, Provident Funds and Insurance Companies to invest in bonds issued by infrastructure companies even if those bonds are investment grade and not fall in the category preferred by these fund repositories. The introduction of the tax on long-term capital gains could have been delayed by another few years, especially keeping in mind that the equity capital market is the only option for many companies for mobilising resources as the banks are presently shy to lend to manufacturing and infrastructure companies. This would surely dampen the buoyant investment spirit which has been prevailing.”
Govind Sankaranarayanan, COO-Retail Business & Housing Finance, Tata Capital
“The Budget 2018 announcement seems to have struck a delicate balance between the populist demands and fiscal prudence, given the past year’s subdued economic growth. The world’s largest health care benefit programme could have dramatic and far reaching implications for the health and insurance industries. The setting up of a dedicated Affordable Housing Fund reinforces the government’s commitment to this sector, which should also provide an additional fillip to the real estate sector and financial institutions supporting the government’s Pradhan Mantri Awas Yojna scheme. Overall, the various initiatives should generate rural incomes and create jobs which should ultimately result in consumption.”
Khushru Jijina, Managing Director, Piramal Finance and Piramal Housing Finance
“The Union budget 2018 was a pragmatic one and focused on fortifying the economy as a whole. The Government’s endeavor to provide housing to every poor citizen by 2020 through the establishment of a dedicated affordable housing fund in the national housing bank, along with priority sector status being granted, is a commendable one. The government assuming ownership of NHB from RBI is also positive as it would translate into the focus of NHB shifting from regulation to development. The reduction of the GST rate from 12% to 8% on affordable and low-cost housing units last week was a welcome reform. Building 31 lakh homes in 2018-19 in urban areas and a further 51 lakh in rural areas will go a long way in addressing primary housing demand. Overall, the strong economic impetus provided in the budget will ultimately boost housing and real estate. The introduction of long term capital gains tax at 10 per cent on equities will also have an indirect impact on making investment in real estate (over listed stocks) more attractive than before. Tax breaks being granted to senior citizens and salaried employees will increase their disposable income available for making capital purchases. A push on infrastructure comprising public investment in the rural areas, agricultural marketing, urban connectivity, particularly Metros etc will also multiply investment prospects for real estate sector.”
Sandeep Upadhyay, MD and CEO , Centrum Infrastructure Advisory
“Overall the initiatives announced in FM’s Budget speech for the infrastructure space seemed to be focused on the unleashing the capital expenditure cycle in line with the structural and policy reforms introduced in the sector over the last few years. While the key highlight for me was the renewed focus on augmenting rural infrastructure, however this Budget is in particular very positive for players in the transportation infrastructure sector.
Key highlight: Augmenting rural infrastructure besides emphasizing on new roll out models in transportation sector.
Overall Comment: Highly positive for transportation sector (Roads, Railways, & Airports).
The budget as expected seems to be tilted towards the populist side driven by investments primarily focused into the Social, Agriculture and Infrastructure sector. However despite the huge capital Commitments the projected fiscal deficit being contained to 3.3% for FY19 is reassuring and commendable. Increased weightage to push development of rural and agriculture infrastructure was one of the major highlights of the FM’s budget speech.
Overall it seems the Government’s exchequer shall have to be leveraged big time for undertaking the commitments to the Infrastructure sector which commands an all time high allocation in FY19. The transportation sector including Railways, Road and Urban transportation sectors are the biggest beneficiaries. While the target set for the Bharatmala Projects is aspirational however completion of 9000 Kms of road projects on FY18 is commendable and demonstrates prudent policy and regulatory changes effected in the Roads and Highways sector. While the plan to monetize assets through innovative models like the Toll Operate Transfer (TOT) is still at nascent stage however it shall be a critical tool for NHAI to reach its target. Continued emphasis on the Bond market and the encouraging Infrastructure Investment Trusts (InVITs) is a prudent move however one was expecting to hear some more concrete steps being taken around the deepening of the Bond market. The aviation sector which has continued to witness phenomenal growth would be augmented on the airport Infrastructure side to keep pace with the overwhelming growth in passenger traffic. The capital expenditure budgeted for Railways sector is pegged at 1.48 Lac Crores. Majority of this Capex is supposed to be spent on track augmentation and enhancing safety standard which is also the need of the hour in the Railways sector.”
Ashish Jindal, Co-Head, Real Estate, Sanctum Wealth Management
“The establishment of a dedicated Affordable Housing Fund under National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government, is a big positive for the real estate sector. It would go a long way in meeting the Hon’ble Prime Minister’s vision of housing for all by 2022. Further, it could drive a few major real estate companies to look at affordable housing as a viable business opportunity. Post demonetisation, the secondary market witnessed a bit of turbulence due to the absence of liquidity. Additionally, in major cities, the circle rates were increased and had become more than the market rates. This resulted in a gap between the two rates, which was counted as income in hands of both buyer and seller. Hon’ble Finance Minister has given a big relief by allowing upto a 5% gap between the two and this has the potential to remove the irritant and revive secondary market transactions.”
Rakesh Makkar, Director, Grihashakti – Fullerton India Home Finance Company
“We welcome the announcement of a dedicated affordable housing fund in the National Housing Bank. This initiative as well as the GST announcement last week on rationalisation of affordable and low-cost housing will encourage formal credit penetration into the sector. The Affordable Housing Fund will further add momentum to Government’s agenda of Housing for All by 2022 by providing easy access to formal credit.”
Archit Gupta, Founder & CEO ClearTax
“Standard deduction has been reintroduced but at a cost, it takes away medical reimbursement and travel allowance. There were several demands to raise medical reimbursement from 15,000 and bring it up according to current prices (the amount has been same since more than a decade). However, now the clamour for raising this limit will die down. With this, for a salaried, the amount taxable under salary shall be reduced by Rs 5,800. While cess will go up by 1%. Senior citizens have much to rejoice and will face much lower burden of taxes, this is especially crucial in the falling interest rates from banks and deposits.”