A Cautious Government May Finally Come Up With An Industry-Friendly Budget
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As the countdown of union budget begins with the beginning of the month of February and corridors of Finance Ministry’s headquarters in the national capital have started buzzing with activities, the million-dollar question which has been making rounds till last week of January on the nature of budget, Finance Minister Arun Jaitley has in a subtle manner ended all speculations saying this is not going to be a populist one. A message which though has not gone down well among the political parties and various political groups, however, been silently cheered by the industries while markets have been holding their breath till the day of 29th February.
Trusted lieutenant of Prime Minister Narendra Modi, Arun Jaitley has a tough task now in hand. The Member of Parliament through Rajya Sabha quota, Jaitley has certain reasons to worry—implementations of the seventh pay commission recommendations and arranging funds for honouring his government’s commitments towards the One-Rank-One-Pension (OROP) need loads of money. I am sure the Finance Ministry officials under the guidance of their Minister have been burning mid-night oil to strike a balance.
Meanwhile, our wise and smart Governor of Reserve Bank of India, Raghuram Rajan has not slashed the rate of interest even as he continues to wait for a signal from Modi government. Rajan’s words on February 2 during release of RBI’s review documents indicate his cautious walk in this time of volatility, felt in the economy as well as markets. All this while, we need to keep in mind that the Prime Minister still has a level of comfort, thanks to lower prices of crude oil. I do not find any reason that this February, the government will not be coming up with a good growth budget. We all are eagerly looking forward to it.
My understanding of this government and present state of Indian economy tells me that infrastructure sector will remain the main focus of this budget. Government will agree to pump in enough funds towards this important sector as private players have been shying away from investing in these days of global meltdown and Chinese threat. Another area, I believe, the government will be having its focus on, the irrigation sector. Over 60 per cent of the country’s farmland is yet to be irrigated. Government now has to come forward and lay emphasis on this ignored sector as well. Last 10 years or so, not much of activities were witnessed when it comes to irrigation sector. I believe, Modi’s government will ensure country’s farmland and farmers get their dues, long-standing, infact.
When we talk budget, how can we restrain ourselves from mentioning taxation policies—section 80C may soon have a larger coverage area, bringing in much relief for the tax-payers. Flip side is, dividends may soon become taxable, if not for a lower amount of dividend income but for the richer ones, may be when it crosses a limit of Rs one crore or so. Government will also have to ensure the disinvestment target is achieved this year. Last year, the success rate is far below from expected and I am not even mentioning the target. But then, unless the markets have something to offer to the individual investors, disinvestment process of the PSUs will not fetch much money for the exchequer. A balance has to be worked out and our FM is good enough when it comes to balancing, as an economist, politician and even as an advocate.
I appreciate the work being done by the Apex Bank these days. When it comes to give guidance to PSU banks on tackling their NPAs and also recovery process, RBI has been acting much effectively. Meanwhile, I expect the upcoming budget to bring in some attractive measures when it comes to the housing sector. Millions are still homeless in the country and the government had earlier made a promise to build homes for each of the citizens of this country. The promises are meant to be kept and work towards this direction must be initiated earliest—this will not only bring in smiles on the faces of millions across the length and breadth of the country, the steps will also ensure buoyancy in the housing sector, higher home loan earnings which will get interpreted to better earnings and bottomline for the PSU banks.
Ten years back, on this space I had this appeal to the then government for awarding Dhirubhai Ambani, the man behind not only Reliance Industries Limited and its multiple subsidiaries but also the face of India Inc. Though it is late but I am happy to note the efforts of Dhirubhai have been finally awarded as his name prominently featured among the Padma Vibhushan awardees this year.
This issue we have over two dozens of faces from various sectors of industries, markets, government bodies and industry pressure groups, talking about the upcoming budget expectations and they have also talked about how investors should behave in the markets during these crucial days of February. Our team reached out faces who matter across the country and compiled their words for our valued reader-investors.
Happy reading, happy investing!