Budget 2019-2020
Govt to spend Rs 100 lakh crore on infra, measures to ease funding crunch.
The government placed a big thrust on infrastructure sector in Budget 2019, proposing to spend about Rs 100 lakh crore in the next five years.
The government announced the formation of an expert committee to suggest ways to address the challenges of infrastructure financing.
The expert committee will recommend a structure and flow of funds through development finance institutions, said Finance Minister Nirmala Sitharaman in her budget speech.
Easing liquidity
Sitharaman proposed a number of measures to enhance the sources of capital for infrastructure financing, including forming a Credit Guarantee Enhancement Corporation in 2019-20.
A Credit Guarantee Enhancement Corporation provides an additional source of assurance or guarantees that the borrower will service the loan. It can also help borrowers raise loans at reduced interest rates.
The Finance Minister also proposed an action plan to deepen the market for long term bonds including for corporate bond repos, credit default swaps etc., with a specific focus on the infrastructure sector.
The government also allowed investments made by Foreign Institutional Investors (FIIs) and Foreign Portfolio Investment (FPIs) in debt securities issued by Infrastructure Debt fund (IDF)-NBFCs to be transferred or sold to any domestic investor within the specified lock-in period.
Focus on PPP
For the Indian economy to reach $5 trillion, the finance minister said India would require investments averaging Rs 20 lakh crores every year ($300 billion a year). The budget estimated that railway infrastructure alone would need an investment of Rs 50 lakh crores between 2018 and 2030.
Sitharaman proposed to use Public-Private Partnership to unleash faster development and completion of projects and to make available a blueprint this year for developing National Highway Grid, gas grids, water grids, i-ways, and regional airports.
For the highways sector, the Finance Minister has said the government will carry out a comprehensive restructuring of National Highway Programme to ensure that the National Highway Grid of desirable length and capacity is created using financeable model. After completing the Phase-1 of Bharatmala, states will be helped to develop State road networks in the second phase.
Talking about the government's vision for using rivers for cargo transportation, the Finance Minister said the movement of cargo volume on Ganga is estimated to increase by nearly four times in the next four years.
On the power sector, the Finance Minister announced recommendations of the High-Level Empowered Committee (HLEC) on the retirement of old and inefficient plants, and addressing low utilisation of Gas plant capacity due to paucity of Natural Gas, will also be taken up for implementation now.
Sitharaman also said the government is examining the performance of Ujjwal DISCOM Assurance Yojana (UDAY) to improve it further.
She said the government will work with the States to remove barriers like cross subsidy surcharges, undesirable duties on open access sales or captive generation for Industrial and other bulk power consumers. Besides these structural reforms, considerable reforms are needed in tariff policy. A package of power sector tariff and structural reforms would soon be announced.
The Finance Minister also spoke about investing Rs 80,250 crore on upgrading 125,000 km of rural roads in the next five years.a
Mr. Vipin Sondhi, MD and CEO, JCB India Limited.
“The Union Budget presented by the government is about India's long term vision. It addresses the many factors required for our country to become a $ 5 Trillion economy in a few years from now. The budget aims at building India's capability across sectors. Vital amongst them, is the creation of Social Infrastructure which would thus lead to an improvement in the ease of living. In addition to urban India, it has kept rural India and agriculture in focus. An allocation of Rs. 80,000 crores for rural roads, will improve connectivity and will also create opportunities for trade and employment for youth. The budget also brings to forth the thrust towards building a sustainable environment with a strong focus on water management through the 'Har Ghar Jal' initiative. Moreover, it addresses the aspect of electric mobility as well and intends create an ecosystem for it to scale up. The budget touched upon the importance of growth for MSMEs to improve exports through innovation. With infrastructure growth being vital to achieve all of the above, a revival of the PPP, structural reforms in asset monetisation and a notable provision for infrastructure with improved liquidity over the next few years is welcome.”
Mr. KK Pahuja, President, Indian Stainless Steel Development Association (ISSDA)
“The domestic stainless-steel industry was expecting a higher level of protection in form of increased basic customs duty (BCD) on imports of stainless-steel finished products from 7.5% to 12.5%, at par with carbon steel. Keeping in mind the protectionist measures taken up by other countries, this step would have translated into a major step to not only safeguard the domestic stainless-steel industry but also stimulating production growth, as India is a currently a soft spot for dumping.
However, BCD on stainless-steel semi finished products under HS code 7218 have been raised to 7.5% from 5%. This barely changes the scenario as there is little import of these semi-finished stainless-steel products in the country. Most of the import is in stainless steel flat products, where imports market share is as high as 20% and needs protection.”
Jaydev V. Sanghavi, (Executive Director) Aarvi Encon Limited.
"During the union budget announcement, the government mentioned its plan to spend 100 lakh cr on infrastructure and development over the next 5 years. This vision brings out an opportunity to open enormous roadmaps for our country, hoping to generate employability, especially engineers pertaining to the Civil sector in order for project executions and constructions, proving to be positive in our line of business activity. Taking India forward through technology in both urban and rural areas, the government also spoke about Big Data and AI which will improve the aspects of decision making, speed and accuracy resulting in the ability to benchmark and track the progress of developmental projects. Thus, recognizing to be very promising for years to come. Overall, this is a positive move by the government as it also acknowledges to look at the labour rules and ease them with times to come.”
Mr. Ashwin Reddy, (Managing Director) Aparna Enterprises Ltd.
“Budget 2019 has given a much required push to the infrastructure industry. Increased budget allocation for Pradhan Mantri Gram Sadak Yojana Phase 3, FAME II scheme, rail and metro project for 300km, proposed investment in suburban railways through special purpose vehicles will aid the sustained growth of infrastructure as well as the building material industry. Increasing custom duty on domestic industries like tiles will definitely boost the demand for Indian brands and this will aid in strengthening business opportunities locally. We were hopeful that there will be announcements around GST regime and single window clearance mechanism, however, it was a miss in this budget”
Mr. Abhishek Kumar, Regional Director, South Asia, Oncam
The Government has earmarked Rs. 50 lakh crore for the development of railway infrastructure. A sizeable part of it will be diverted towards avant-garde surveillance solutions for smart management across railway stations as well as various nodes in railways. The Union Government's focus is also on rural infrastructure expansion and we believe that surveillance will be an integral element in this development. Another key takeaway for the surveillance industry is that the Government also has a positive view towards the Artificial Intelligence technology and will be promoting indigenous research and development around AI, Big Data, and Robotics. Further, it has taken a slew of measures aimed at the Indian startup ecosystem, who will be looking towards the AI technology and security for development of high-end products and ensuring seamless processes. We appreciate the Finance Minister and her team for meticulously balancing all dynamics to bring about favourable market results.”
Sachin Bhandari, CEO, VTP Realty
Government has taken two major initiatives to formalize and control financial institutions in the country. Recently there has been a crisis in the NBFC sector and the steps taken by the Government will help the NBFCs to raise the money quite easily, because they have been the backbone of growth in India. Including the interior and rural areas. Thus helping increase the GDP of the country as well as the real estate sector on the whole. So one of the big positive steps taken by the Government is to support the NBFCs in infusing more funds into the sector. Secondly a second major move, which must be lauded, is to bring all housing finance companies under the ambit of the RBI. RBI has been controlling only the banks uptil now while the housing finance companies were being managed by the NHB (National Housing Bank). RBI will bring in more fiscal discipline and we expect all NBFCs to be more structured and tightly regulated guaranteeing a boost to not only the sector but overall growth for the country. I believe these are the two major announcements made in the budget today that will have a positive impact on the realty sector.
Amongst some of the other initiatives the Finance Minister has announced, much is being proposed to continue their push towards Affordable Housing. Several reforms would be undertaken to promote rental housing which indicates that a modern tenant law will be formulated. To provide further impetus to affordable housing, additional deduction of 1.5 lakh rupees on interest paid on loans borrowed up to 31 March 2020 for purchase of house up to ?45 lakh. The government's consistent efforts towards Housing for All by 2022 is very encouraging for us as a business and also as consumers. To provide further impetus to affordable housing, additional deduction of 1.5 lakh rupees on interest paid on loans borrowed up to 31 March 2020 for purchase of house up to ?45 lakh. The government's consistent efforts towards Housing for All by 2022 is very encouraging for us as a business and also as consumers.
Mr. Madhusudhan G., Chairman and MD, Sumadhura Group
• The Union Budget successfully portrayed the government's continued efforts to achieve 'housing for all' by 2022 with over 80 lakh houses being sanctioned under this initiative.
• The additional tax deductions on home loans for self-occupied house owners and tax reliefs on interest paid are an incentive enough to boost up sales in the affordable sector.
• The proposed Model Tenancy Law aims at bringing momentum in the rental-housing sector.
• Government to reform multiple Labour Laws and to rationalize them into four codes, thus standardizing the process of registration and filing of returns.
• The partial credit guarantee to the Public Sector Banks (PSBs) addressed the crucial NBFC liquidity issue.
• Besides this, the Government's decision to increase investment allowance of Foreign Portfolio Investors (FPI) in REITs will spur the flow of funds in the industry.
Although issues like single window clearance and Input Tax Credits (ITC) benefits in GST weren't addressed, multiple pro-industry reforms majorly outweigh the few misses.
Mr. Sanjay Gupta (India Head), Vice President and India country manager, NXP.
“We welcome the government's move to lower the GST rate from 12% to 5% for purchase of Electronic vehicles and the vision to make India as the global manufacturing hub. The push for FAME II by providing the right incentives can encourage a faster conversion rate. Semi-conductors and host of other components will be vital in developing the EV Ecosystem in the country and as NXP, we will play a vital role to foster this goal. Initiatives such as complete elimination of customs duty on some EV components could prove to be a gamechanger for the auto-industry. Currently, over 80% of the cars in India use NXP chip for RFID key”
“Research and Development is crucial for an advanced ecosystem of infrastructure to exist. The government's focus on incentivizing research by forming a National Research Foundation and encouraging foreign engineers and researchers to come and collaborate is a landmark announcement for India's electronic industry. For NXP, India is majorly the innovation hub. We run three design/ R&D centres in India which innovate technologies for the world. There are more than 2000 people in Design Centers (Noida, Bangalore and Hyderabad) who are involved in development of semiconductor hardware and software designs across various verticals – Automotive (connected cars), digital payments (NFC enabled), 5G (RF solutions) and many more.”
Mr. Kartik Walia, Head of Operations (India), Amplify.ai
"We see multiple positive takeaways from this year's budget. The government, while adding greater impetus on digital adoption and infrastructure enhancement, has a positive outlook towards promising technologies including Artificial Intelligence and Big Data. It has recently announced the launch of National Artificial Intelligence Center and National AI Portal and now, in the Union Budget, has promised to build skillsets in ultramodern technologies such as AI, Big Data, and Robotics. The Government's technology-centric strategy is highly appreciable and we believe that favourable results will be visible in the near future."
Mr. Tanuj Choudhry, Chief Business Officer & Board Member, HomeLane.
“This year's budget has announced encouraging developments for some segments of the start-up community in India. Bringing more companies with an annual turnover of up to INR 400 crore under the lower corporate tax bracket of 25% is an encouraging move and it will help many companies have better liquidity. We were hopeful that the government will abolish Angel Tax. However, the measures to ease scrutiny from Income tax department by the introduction of e-verification for investors will definitely ease many budding businesses. It is also reassuring that measures have been taken to carry forward and set off losses for start-ups and increase the period of exemption of capital gains arising from the sale of residential house for investment.”
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