Budget 2019: Focus on driving bond investment can be a gamechanger, explains Edelweiss CEO Rashesh Shah

Published: July 6, 2019 2:27:59 AM

Budget 2019 India: The Budget stands out for its strong push on investment.

Budget 2019-20, Union Budget 2019 IndiaUnion Budget 2019 India; The last five years of the government have seen a strong focus on infrastructure.

By Rashesh Shah

Budget 2019 India: The Budget has hit almost all the right notes — pushing for growth and investment, maintaining financial discipline and driving consumption, especially in rural areas. The coverage of such a wide breadth of areas in a single budget is refreshing. While some of the targets are challenging, the government has shown its action-oriented nature and executional efficiency over the last 5 years. This can be seen in some of the information shared by the finance minister during the Budget — success in reforms like GST, IBC and RERA is definitely an encouraging sign and augurs well for the future, especially with a target of reaching a GDP of $5 trillion by 2024 — again challenging but not impossible. Clearly, the Reform, Perform and Transform policy of the government is working well.

The last five years of the government have seen a strong focus on infrastructure. This will continue going forward, if India is to become a $5-trillion economy over the next five years. Affordable housing, in particular, is highly encouraging — both in terms of work done till now (81 lakh houses sanctioned and work initiated on 47 lakh) but also in terms of the long-term aspiration of the government (housing for all by 2022).
The Budget also stands out for its strong push on investment. It is clear that investment, both domestic and overseas investors, will be needed to target a 12% GDP growth. The government has taken a bevy of measures — streamlining KYC norms for FPI investors, enhancing FDI limits in certain sectors, allowing REITs investment for overseas investors, suggesting the enhancement of the minimum public shareholding limit, among others.

The finance minister has also recognised the important role played by NBFCs in driving consumption-led growth in the economy as well as capital formation in MSME segment. By providing a six-month partial credit guarantee to PSBs, the government has reinforced its support for good quality NBFCs.

Funding the proposed expenditure will also take some intense efforts. The gross tax collection target with around 18% growth seems somewhat optimistic but achievable. In addition, the decision to raise borrowing from overseas sources will help diversification of borrowing sources. The government has also focused on tapping into non-tax revenue sources — enhancement of the divestment target and monetisation of idle assets will help generate additional revenues. All this together has actually ensured that the fiscal deficit target will actually improve from 3.4% to 3.3% —which is definitely a positive surprise.

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The clarity on start-ups is also encouraging — especially in terms of the recent uncertainty around certain provisions on their taxation.

Overall, it is an encouraging budget which has taken due cognizance of the need to push growth in the economy. At the same time, the government has ensured that there will be no indulgence into excesses, in an effort to drive this growth.

The author is Chairman and CEO Edelweiss Group

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