‘Budget sets the tone for next five years’

In our view, this much-anticipated first Budget of the new Government has done a great job in setting the tone for the next five years.

The Budget highlighted the Centre’s rational approach to policies for taxation, Government spending and growth.

Infrastructure, housing and finance sectors were among the biggest winners, with key measures to improve funding availability to low-cost housing through NHB, to real estate through REITs and to infrastructure through banks and Infra Investment Trusts.

Agriculture got its due attention with various funds and schemes that should eventually help tackle food inflation.

The Budget also mentioned that GST was firmly in their near-term agenda.

Increasing the FDI limit in defence and insurance was also a step in the right direction.

While the laws for retrospective taxation were not repealed outright, the Government acknowledged a commitment to rationalise taxation matters pertaining to foreign investors.

Moreover, another key measure for foreign portfolio investors was that their income from transactions in securities would be treated as capital gains instead of business income currently. Lower tax rate on interest on foreign borrowings was also extended.

Overall, the Budget appeared investor-friendly and should further encourage continued inflow of funds into the country in line with the improving economic outlook.

Over the next year or so, one is hopeful that the Government distinguishes itself on the execution front more than anything else. Also, with more time on their hands, hopefully more concrete measures in key areas such as mining, land acquisition and GST will also see the light of day.

Overall, in my view the markets can continue to look forward to an improving outlook for the Indian economy, spelling significantly positive for Indian equities.

- Dinesh Thakkar, CMD, Angel Broking

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