Prem Rajani, Managing Partner, Rajani Associates, shares his views on the Budget
ROADS & HIGHWAYS

Prem Rajani, Managing Partner, Rajani Associates, shares his views on the Budget

“The Budget 2019 has touched upon almost every sector, while not disrupting the overall economic environment. It seems to provide the necessary push in-field of infrastructure, agriculture, banking and finance, technology and biggest of all housing for the common man. The government continues its initiatives towards upgrading India’s road and real infrastructure. From an industry perspective, we have seen focused efforts to support foreign investments, promotion of NBFCs and other incentives.
 
Sectors that will stand to gain the most under the Budget 2019 are SMEs, MSMEs, infrastructure, banking and NBFCs. 

Infrastructure: The government has reaffirmed its commitment to set goals and schemes initiated (such as Bharatmala Pariyojana and the Sagarmala programme) by integrating state government participation to develop the road network. The boost to the sector expenditure of about Rs 100 lakh crore over the next 5 years while highlighting the need for public-private partnerships (PPP) to ensure efficient delivery of projects is heartening. The 'One Nation, One Power' grid in the power sector, to ensure power connectivity to states at affordable rates is promising as well. Further, by allowing Foreign Portfolio Investors (FPIs)/NRIs to subscribe to listed debt papers of REITs and InvITs, the government is definitely catalysing movement in these sectors, which hitherto have seen slow progress.
 
Banks & NBFCs: We will definitely see a credit boost due to the relief state-run banks would receive based on the Rs 70,000 crore capital infusion which is a healthy step.
 
Another major move to catalyse the currently slumped NBFC sector is the allowance of Foreign Institutional Investors (FIIs) and FPIs investment in debt securities issued by NBFCs. This will certainly positively strengthen the overall economy with additional external cash inflow and therefore enable liquidity. What will require work here is the understanding of the norms and regulations by these investors towards these financial instruments; therefore, a robust and watertight framework must be provided.
 
Real Estate: Developers and real estate companies focussing on affordable housing will tremendously benefit from the tax holidays offered on profits. We can continue to see more affordable housing projects crop up due to the deduction of interest on loan taken to purchase self-occupied house property which was increased from Rs. 1.5 lakh to Rs 2 lakh.
 
What would be interesting to see is how the Government aims to alter rental housing laws with the advent of the model tenancy law.
 
Capital Markets: The Budget 2019 aims to rationalise and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly. This along with NRI portfolio route to be merged with FPI will raise confidence among investors for seamless investment in stock markets.
 
Investments: The Budget greatly emphasises on strengthening FDI in India. With the plans to liberalise FDI in aviation, media, animation and insurance intermediaries, we can expect many activities such as JVs, M&A and PE/VC investments within the sector. 
 
Small businesses/MSMEs: SMEs and MSMEs have been at the focal point of this Government as they propel job creation. Supporting this sector by way of the interest subvention scheme, Rs 350 crore allocation is for 2% interest subvention to all GST registered MSMEs in the current year on all fresh and incremental loans, as well as plans to open a payment portal for MSMEs. Investment in MSMEs will receive a big boost through the portal if the delays in payments to SMEs and MSMEs are eliminated.”

“The Budget 2019 has touched upon almost every sector, while not disrupting the overall economic environment. It seems to provide the necessary push in-field of infrastructure, agriculture, banking and finance, technology and biggest of all housing for the common man. The government continues its initiatives towards upgrading India’s road and real infrastructure. From an industry perspective, we have seen focused efforts to support foreign investments, promotion of NBFCs and other incentives. Sectors that will stand to gain the most under the Budget 2019 are SMEs, MSMEs, infrastructure, banking and NBFCs. Infrastructure: The government has reaffirmed its commitment to set goals and schemes initiated (such as Bharatmala Pariyojana and the Sagarmala programme) by integrating state government participation to develop the road network. The boost to the sector expenditure of about Rs 100 lakh crore over the next 5 years while highlighting the need for public-private partnerships (PPP) to ensure efficient delivery of projects is heartening. The 'One Nation, One Power' grid in the power sector, to ensure power connectivity to states at affordable rates is promising as well. Further, by allowing Foreign Portfolio Investors (FPIs)/NRIs to subscribe to listed debt papers of REITs and InvITs, the government is definitely catalysing movement in these sectors, which hitherto have seen slow progress. Banks & NBFCs: We will definitely see a credit boost due to the relief state-run banks would receive based on the Rs 70,000 crore capital infusion which is a healthy step. Another major move to catalyse the currently slumped NBFC sector is the allowance of Foreign Institutional Investors (FIIs) and FPIs investment in debt securities issued by NBFCs. This will certainly positively strengthen the overall economy with additional external cash inflow and therefore enable liquidity. What will require work here is the understanding of the norms and regulations by these investors towards these financial instruments; therefore, a robust and watertight framework must be provided. Real Estate: Developers and real estate companies focussing on affordable housing will tremendously benefit from the tax holidays offered on profits. We can continue to see more affordable housing projects crop up due to the deduction of interest on loan taken to purchase self-occupied house property which was increased from Rs. 1.5 lakh to Rs 2 lakh. What would be interesting to see is how the Government aims to alter rental housing laws with the advent of the model tenancy law. Capital Markets: The Budget 2019 aims to rationalise and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly. This along with NRI portfolio route to be merged with FPI will raise confidence among investors for seamless investment in stock markets. Investments: The Budget greatly emphasises on strengthening FDI in India. With the plans to liberalise FDI in aviation, media, animation and insurance intermediaries, we can expect many activities such as JVs, M&A and PE/VC investments within the sector.  Small businesses/MSMEs: SMEs and MSMEs have been at the focal point of this Government as they propel job creation. Supporting this sector by way of the interest subvention scheme, Rs 350 crore allocation is for 2% interest subvention to all GST registered MSMEs in the current year on all fresh and incremental loans, as well as plans to open a payment portal for MSMEs. Investment in MSMEs will receive a big boost through the portal if the delays in payments to SMEs and MSMEs are eliminated.”

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