Budget 2014: Reactions

We welcome the announcement with regards to the Rs.4000 crore subsidies for National Housing Board to promote affordable…

Budget 2014: Reactions

?We welcome the announcement with regards to the Rs.4000 crore subsidies for National Housing Board to promote affordable housing as we are focussing to lend in this segment which is a priority sector for us. We also feel the tax rebate on the housing loans from 1.5lacs to 2lacs is a much awaited and welcome move which is going to give a thrust to new purchases and facilitate the future buyers to take a decision on purchase. Governments focus on infra investment towards roads and highways will help developers to scale up and expand vicinity of development of projects. Steel input cost for developers will come down post the announcement of the budget enabling faster construction and increased margins?.


The Union Finance Minister in his Budget has set the ball rolling for an increase in foreign direct investment limit in the insurance sector to 49 per cent from the current 26 per cent.

To quote the FM, “The Insurance sector is investment starved. Several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route”

While, the long-pending Insurance Laws Amendment Bill, 2008, proposes an increase in foreign holding in insurance joint ventures to 49 per cent from the existing 26 per cent with corresponding voting rights, it appears that the Indian Management and Control would mean restriction of voting rights as well.

This far the FDI in insurance was on a direct basis and did not need any FIPB clearance, now it seems for the increase amount FIPB would get involved. We therefore would need to once again understand the process in this respect

Other than the fact that there seems to be a concerted effort to build road and alternate energy infrastructure, steps to enthuse fresh investment momentum in industry are not very clear. There also does not seem to be any road map or statement on disinvestment process other than the announced PPP model in railways. From an insurance point of view whenever disinvestment happens there is additional risks available for insurance in terms of either the new owner putting in additional capital to upgrade facilities or new risks actually coming on the market.


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First published on: 11-07-2014 at 15:52 IST