The Union Budget 2018 skilfully touched upon the most basic areas of the economy, surprising citizens who were expecting a budget aimed at elections, the Indian Chamber of Commerce and Industry has said. According to chamber president Rajesh Agarwal, the Budget was generous on agriculture and healthcare. The soul of our country is agriculture, and the government’s decision to back it up is a welcome move, he said. Around ₹2,000 crore has been allocated for developing agriculture market. There are also steps to promote organic agriculture and market access for agricultural produce. The minimum support price (MSP) for the Kharif season has been set at 1.5 times the cost price of the crop, which will prove to be life-saving for farmers, he added.
Deepak L. Awani of FICCI Kerala State council said that the Budget would drive consumption in a big way, thus helping growth in other sectors. The attention given to MSMEs through better access to finance or lowering of the corporate tax rate will also help spur employment and growth. FICCI also believes that the stress on jobs in the Budget will help generate meaningful employment. The new national health protection scheme is also a laudable initiative, he added.
Corporate tax
Antony Thomas Kottaram, chairman of the Kerala Chamber of Commerce and Industry, welcomed the Budget. The focus on infrastructure and rural development as well as agriculture is a welcome step, he said. Raising corporate tax bracket to ₹250 crore turnover is also a good step, he added.
The Budget has adopted simple strategies to keep the enthusiasm high. It focuses on doing business with ease and in a transparent manner, continued efforts to lower fiscal deficit to realise a lower interest rate scenario and thrust on MSME sector by providing easy access to credit, said George Alexander Muthoot, managing director, Muthoot Finance.
Shaji Varghese, president of the Cochin Chamber of Commerce and Industry said that with the Budget-2018, the Indian economy seemed to be on the track for high growth. Clocking an average growth of 7.5% in the first three years, it is hoped that the economy will grow 7.2% to 7.4% in the short run and will achieve the targeted growth of 8% in the long run.
The Budget, with political overtones, is “certainly not a populist budget,” said V.K. Vijayakumar, chief investment strategist at the city-based Geojit Financial Services. But the fiscal slippage in the 2018 financial year to 3.5% from the target of 3.2% and the 10% tax on long-term capital gain are negatives from the market perspective. From the market perspective, the retention of Securities Transaction Tax (STT) while introducing LTCG (long-term capital gain) is disappointing, but not worrisome, he added.
Looking at the positive side, LTCG tax will avoid irrational exuberance and bubbles forming in the market due to huge capital flows. From the long-term perspective, LTCG is not a major dampener. Equity has delivered more than 15% compound annual growth rate (CAGR) during the last 38 years. Even if it comes down to 13.5% after 10% LTCG, it is far more attractive than all other asset classes in the long run.
T.S. Kalyanaraman, chairman of Kalyan Jewellers, said that the estimated GDP growth at 7.2% to 7.5% in the second half of 2018 should help boost consumer demand and give a positive momentum to gold and jewellery sales.
Moreover, the positive focus on the rural economy is expected to benefit farmers with more disposable income which also augurs well for the industry.
Scope for NRIs
Yusuffali M.A., chairman of LuLu Group, said that the Budget was encouraging for India, which was the seventh largest economy. It is a growth-oriented budget with more emphasis on rural and infrastructure development. It will enable India to get a competitive edge in the global economy and bring about real changes.
One of the most important policies announced recently by the Union government was about treating all NRI investments as domestic investments. This has thrown open many new investment opportunities for NRIs, especially from the Gulf region, who have always wanted to invest back in India and be an active partner in country’s growth, Mr. Yusfuffali observed.
Though there is no mention about NRIs in the Budget, “I hope the government will come up with proposals or initiatives to leverage the potential of NRIs to invest more in India,” he said.
Adeeb Ahamed, managing director of LuLu Exchange Holdings, said that the Budget laid great emphasis on improving the agricultural economy along the development of infrastructure and healthcare. Through initiatives like universal healthcare, higher MSP for farmers, emphasis on education and entrepreneurship, the government has laid stress on building a strong foundation for a new India.
Exports
A. Satkthivel, regional chairman of the Federation of Indian Export Organisations, Southern Region, said in a statement that the focus given to farm sector-related infrastructure would go a long way in placing India among the major producer and exporters of processed food. Selecting 99 cities for the Smart City Programme, online loan sanctioning facility to speed up loan disbursals to MSME, and contribution of 12% of wages of new employees extending to all sectors are positive steps, he added.
