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The Budget 2015 addresses the three key interrelated challenges facing the economy — weak investment cycle (both infrastructure and industry), job-creation, and poverty alleviation.
Key positives are the boost to infra-spend, guidance for lower corporate tax, provisions pertaining to banking sector holding company , combining foreign portfolio and Foreign Direct Investments into one category and the gold monetisation plan. This Budget is targeted at boosting public spend with infrastructure as a key focus area.
Targets for affordable housing, power for all by 2022 and six crore new toilets seek to provide basic services to all citizens.
Given this background, in the near term, all sectors related to housing should do well, including select real estate, housing finance and housing material companies.
In the medium- to-long term, expect domestic cyclicals and rate-sensitives to start looking up — mainly infrastructure/construction, capital goods and NBFCs. Also, with public sector banks gaining the government’s attention, we should expect significant profit and stock action there as well.
If you invest in quality companies and keep a long-term view, there is much that investors can gain from this Budget.
Anand Rathi Founder & Chairman, Anand Rathi Financial Services
The Budget has focused on prioritisation and delivery. The basic focus has been to kick-start the investment cycle. Apart from inducing private investment, it has scaled up public investment in infrastructure as a catalyst for private investment. The Budget has also embarked on the path of improving “doing business” conditions.
These include procedural simplifications, medium-term guidance on vital areas (for example on corporate income-tax rate, implementation of GST and introduction of GAAR) and institutional arrangements (such as merger of FMC with SEBI).
The innovative aspects include schemes for monetisation of gold, introduction of sovereign gold bonds held in India, legislative action against black money and big push to insurance and pension schemes for the financially excluded.
While not taking a populist stance, the Budget continued with welfare and social sector schemes. Expenditure reductions in these areas would be through better targeting. In fact, the Budget has scaled up efforts to improve the social security system. Steps to improve healthcare and education systems have also been spelt out.
The Budget has deferred the fiscal deficit target of 3 per cent of GDP from FY17 to FY18. Yet, this needs to be viewed in the context of stepping up of public investment in infrastructure, explicit recognition of the impact of the next pay commission on government spending and greater devolvement of funds to State governments. Disappointments include increased service tax rate, no reduction in securities transaction tax and commodities transaction tax.
Sanjiv Bajaj MD, Bajaj Capital
We welcome the proposal to increase the tax deduction limit for health insurance premium from ₹15,000 to to ₹25,000 for self and family and from ₹20,000 to ₹30,000 for senior citizens. We had been requesting this in various forums. The move will encourage all to procure the required cover. We recommend a health insurance cover of at least ₹5 lakh to ₹10 lakh. So hiking the exemption limit will give big relief to all citizens.
The health insurance industry will be benefited, too, not only in terms of greater penetration but also upgrades of existing policies.
Amit Bhagat MD & CEO, ASK Property Investment Advisors
It was a very balanced Budget focussed on infrastructure spends to kick-start the growth cycle. The focus was on ease-of-doing-business, simplification, transparent practices and structural reforms. It was also focussed on curbing black money parked abroad and domestically.
Structural reforms like a debt management agency, bankruptcy laws and a monetary policy committee should have long-term benefits for the debt market, discourage unscrupulous promoters and follow calibrated approach for monetary policy adjustments.
This is a revolutionary Budget to encourage domestic and foreign private equity capital in the country. All pending issues of the alternate fund industry have been resolved.
Raamdeo Agrawal Joint MD, Motilal Oswal Financial Services
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