The Managing Director of Asset Management Company Ltd, Mr. Nilesh Shah has congratulated the government for maintaining the path of fiscal prudence and said that the budget has reassured the investors. “It has maintained the path of fiscal prudence. Fiscal deficit target of 3.2% for FY 18 and 3% for FY19 will reassure investors. Target of 60% debt to GDP by 2023 can change the Moody’s ratings who have demonstrated poor standards while rating India in the past,” he said.
“FIIs concern on taxation arising from indirect transfer of shares has been addressed. Extension of concessional withholding tax of 5% on ECB and Masala Bonds can turn around debt FII flows. Host of benefits given to affordable housing sector can create supply necessary to absorb unskilled labour and create demand for local materials from cement to tiles. It will allow banking sector to deploy liquidity in safe housing loans. Budget has provided for 25% increase in capital expenditure focused on railway and road. The crucial thing here will be ability of government to spend it, he added.”
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Mr. Shah was also impressed with the steps taken in MNREGA and praised it as a good scheme. He said, “In MNREGA government has been able to deepen 10 lakh ponds and make 10,000 composite post. It a far superior model for spending money than digging holes and filling it. The divestment target is at an all-time high number and will require deft management to achieve it. Listing of companies like IDFC, IRCON can help in achieving the same.”
“For the financial sector Rs. 10000 crore allocation to PSU bank recapitalisation looks low. However, new laws to improve section 138 for cheque bouncing, seizure of local assets of absconder and illegal public deposits will go a long way in improving NPA situation. The tax cuts at base level will keep more money in hands of consumer and boost consumption. Overall, the FY18 budget is ahead of expectations with more money in the hands of consumer, higher tax revenue through better tax compliance, higher growth in Capex and maintaining path of fiscal prudence,” he added.