A budget with long-term growth picture for India

 The Union Budget of 2015-16 was the first full budget presented by the Modi Government, and India Inc. has sky high expectations of reform. The budget, of course, had its own share of drawbacks, but it did not disappoint. Experts feel, the budget gave due importance to all sections of the economy and tried to enhance the ease-of-doing business while keeping its focus on infrastructure development.
The budget provided a perfect balance on policy framework aims in supporting everyone — the common man to the corporate. Let’s discover how the industry has reacted on this year’s budget.
Real estateIt is a good budget for the economy but lukewarm for the housing sector in the immediate terms. Given that housing growth has a high correlation with economic growth, housing sector will definitely benefit in the medium- to long-term. Venkatesh Gopalkrishnan, President and CIO, Shapoorji Pallonji Real Estate, seems very happy about the budget which focused on propelling investments, increasing liquidity and catalysing growth. He explains, “Clarity has been provided for the direction of the next 2 to 3 years in terms of fiscal deficit and growth. Focus of ease of doing business. Rationalising the AIF norms and the permanent establishment norms is proof of the same.”
“The budget has been bittersweet for the real estate sector,” argues Dr Naresh Bharde, Chairman and MD, Excellence Group. “Although the sector will see a 0.5 per cent rise in property rates and hike in service tax, no tax on property ownership (except the super luxury segment) brings some relief. The announcement of the creation 6 crore homes in alignment with the ‘housing for all’ vision will give impetus to projects in the affordable housing sector.”
Interestingly, the Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for private real estate developers in India, feels that the sector has not got the desired position of importance in the budget for the fiscal year 2015-16. The real estate sector was expecting that the Modi Government, like last time, would extend the support to this vital sector and iron-out the difficulties faced by the real estate sector to ensure a positive contribution to the development of the country, by providing jobs and achieving the mission “Housing for all by 2022”.
C Shekar Reddy, National President, CREDAI, says, “The Budget quite disappointing for the real estate sector as budget has not given any impetus to the sector. The sector provides much needed employment, which is the need of the hour, yet, the only provisions in the budget for the real estate sector is the pass through tax for investments in the Real Estate Investment Trusts (REITs) and rationalisation of the capital gains for the sponsors exiting at the time of listing of the units of REITs and InvITs. The Government has allocated ` 22,407 crore in the budget for housing and urban development. The government envisages a plan to construct 2-crore houses in rural India, 4-crore houses in the urban areas towards achieving housing for all by 2022. It is not clear how these targets will be achieved.”
InfrastructureThe pragmatic approach taken by the Finance Minister Arun Jaitley can also provide a boost to infrastructure sector. Emphasise on public sector units to step up investments in infrastructure is very well received. “An additional ` 70,000 crore has been earmarked for infrastructure,” explains Hemant Kanoria, CMD, Srei Infrastructure Finance Ltd. “Apart from increased outlays for the rail and road sectors, he [Arun Jaitley] also intends to mobilise resources for rail, road and irrigation sectors through tax-free bonds.”
Mr Kanoria goes gaga over our finance minister. “The mention of how the sovereign must bear part of the PPP project risks reflects his seriousness on how keen he is to make PPP a success story for India’s infrastructure sector,” he remarks. “In addition, Mr Jaitley has announced the setting up a National Investment and Infrastructure Fund with an annual outlay of ` 20,000 crore from the centre which augurs well for the financing of infrastructure given the fact that banks now have limited headroom to increase exposure in infrastructure.”
The budget has a strong rural focus too. “The finance minister has looked into the needs of the rural sector which supports almost two-thirds of India’s population and has stepped up investments in rural infrastructure like roads, housing, power supply, hygiene, water supply and cold storages which augur well for a holistic development of rural India,” says Mr Kanoria.Shashi Kiran Shetty, Executive Chairman, Allcargo Logistic, is also happy for this year’s budget whose proposed reform in infrastructure is one of its key highlight. He believes that a higher allocation of ` 70,000 crore in the infrastructure space over last fiscal will provide further wings to the economy to achieve over 8 per cent growth in the coming years.
Sunil Mathur, MD and CEO, Siemens Ltd., has welcomed the Budget 2015 with open arms. He says, “It is consistent with the stated objectives of the government, reinforcing its commitment to realisation of infrastructure projects. With the budget, the government seems inclined to follow its bold path of building infrastructure and improve ease of doing business. Its intention to increase public investments while decreasing corporate taxation over a period of time are also steps in the right direction, and we are sure these steps will further improve the confidence of investors and industry alike.”
Even Giles Everitt, Managing Director, CHRYSO India, feels that this budget is encouraging, focused and growth oriented. “The strong focus on infrastructural development through initiatives like hike in investment in infrastructure, allocation of ` 25, 000 crore for rural infrastructure and building 20 million houses in urban India to realise the dream of a roof for each family in India by 2022, are indicators to a positive growth phase. The government is also looking closely to enhance road and rail services and boost the infrastructure sector. This will be instrumental to drive the overall growth of the country.”
ManufacturingTushar Mehendale, Managing Director, ElectroMech Material Handling Systems (India) Pvt. Ltd. is very excited about the budget and feels that it is a good budget for the economy. “It is heartening to see that the GST rollout date has been committed as April 2016,” he remarks. “This will definitely give a massive fillip to the manufacturing and logistics industry as effective economies of scale can be achieved and processes can be simplified.”
He further adds, “Focused disinvestment in loss making PSUs coupled with a contemporary bankruptcy code will definitely aide in cleaning the mess and introducing overall efficiencies in the industry. This will have a long term impact of ensuring the ‘survival of the fittest’ and breed excellence that is much required if India has to emerge as a preferred global manufacturing hot spot.”
Mr Shetty also feels that this budget will add value to the PM Modi’s “Make In India” mission which showcases strong focus on making India a manufacturing hub of the world. Overall, this is a positive budget focused on strengthening of country’s economy in order to make India an economic super power. We are eagerly waiting for action on these proposals.

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