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Nirmala Sitharaman’s Budget draws mixed response from industry in Gujarat

Sitharaman has proposed that housing finance sector be now regulated by Reserve Bank of India instead of the National Housing Bank, which is the regulatory authority at present.

By: Express News Service | Ahmedabad |
Updated: July 6, 2019 3:07:46 am
incom tax slab, realty, market, economy, nirmala sitharaman, budget, budget 2019 date, budget 2019, budget 2019 highlights, budget 2019 india, budget india, union budget, budget updates, union budget 2019 india, budget important points, budget 2019 income tax, Industry leaders track the Budget on television at the Gujarat Chamber of Commerce and Industry in Ahmedabad on Friday. (Express photo)

Even as Union Finance Minister Nirmala Sitharaman on Friday presented the Budget for 2019-20, tepid reactions trickled in from certain sections of the industries in the state.

One of the aspects that Sitharaman stressed on was ‘affordable housing for all.’ The real estate industry did not seem enthused with the provision in Budget where the government provided an additional deduction of Rs 1.5 lakh for interest paid on loans for an affordable house that is valued up to Rs 45 lakh. Jaxay Shah, chairman of Confederation of Real Estate Developers Association of India (CREDAI), said, “There was no need of putting a cap of Rs 45 lakh for availing additional interest deduction for home-buyers.”

In response to Sitharaman’s announcement that reform measures shall be taken up to promote rental housing and a model tenancy law will be finalised and circulated to the states, Jaxay said, “From encouraging public-private partnership for providing land to formulation of rental policy – everything that we have been raising concerns about has been looked into…We will be able to see the benefits of regulation of housing finance companies (HFCs) by RBI only in the time to come.”

Further, Sitharaman has proposed that housing finance sector be now regulated by Reserve Bank of India (RBI) instead of the National Housing Bank (NHB), which is the regulatory authority at present. NHB is otherwise, a wholly-owned subsidiary of RBI.

Nrupesh Shah, executive director of air-cooler company, Symphony Ltd, also expressed his disappointment with the Budget. “The Union Budget has missed the golden opportunity to boost job creation, (arrest) slowdown of economy and (boost) consumption,” said Nrupesh.

West zone chairperson of the Confederation of Indian Industries, Piruz Khambatta voiced the same concern. “…(A) big expectation from the Budget was employment. Overall industry was expecting that the government would want more formal employments and give some concrete big ticket incentives for employment in this sector. However, it has not happened.”

Khambatta believes the growth story lies in the consumption pick-up, which has been largely ignored in the Budget. “The Budget gives some benefits on GST on E.V. Vehicles but more importantly, food processing items, which are consumed by the common man, still stand at a phenomenally high GST rate of 18% in many cases. It would have been in the fitment of things and a further boost to agriculture and food processing economy if the GST council considered processed foods similar to affordable housing, electric vehicles (EVs), textiles and other essential items where the tax rates have been brought down to 5%…,” Khambatta added.

There also remains ambivalence as to how effective the proposals tabled for NBFCs and real estate are and if it may prove to be fatal in the long-run. Sitharaman announced that proposals for strengthening the regulatory authority of RBI over non-banking financial companies (NBFCs) were to be placed in the Finance Bill. “Only nominal steps have been announced to tackle problems faced by the NBFC and real estate sectors. It will lead to major negatives, unless both sectors are brought back to normal health,” said Nrupesh.

It was not only the money market that he feels would be affected negatively, but also the capital market. “Radical, transformative and specific measures to take economy to USD five trillion are missing,“ added Nrupesh.

With the Budget proposing to rationalise export duty on raw and semi-finished leather to provide relief to the sector, Khambatta said that such proposals only makes the Make in India campaign tilted towards manufacturing as a substitute for import.

While Sitharaman mentioned that the government is contemplating to permit 100% Foreign Direct Investment (FDI) in insurance intermediaries and is at a stage of examining suggestions of further opening up FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders, Khambatta said, “…if it would have come sooner, it could have saved many airlines from grounding.”

Even as Sitharaman assured that the government will bring in a New National Education Policy to change the higher education system, Nrupesh didn’t see much promise in it. “It will lead to semi-nationalisation of education institutes and will certainly not improve education quality,” he said.

However, Manan Choksi, executive director at Udgam School for Children, sees promise in Sitharaman’s proposal of a social stock exchange under the ambit of SEBI wherein social enterprises and voluntary organisations can be registered. “The proposal is very interesting as it will be regulated by SEBI. Much of these funds will go to sectors like healthcare and education.”

Khambatta, who is also chairman of Rasna, believes in the Study in India initiative, although overall, he believes the Budget missed out on meeting some crucial industry expectations. “Coming to the Prime Minister’s statement a week back on getting more investments by the corporate sector in agriculture and food processing, the sector was expecting some concrete benefits and changes in the regulations so that investments can take place in the first place but none of that has been forthcoming in the budget,” Khambatta said.

Overall, what lacked were specifics in the blueprint. “Positive intentions expressed, but without specifics on spend on infrastructure, railway station modernisation and streamlining labour laws. Some initiatives to encourage start-ups and ease of income tax scrutiny assessments,” said Nrupesh.

However, Achal Bakeri, chairman and managing director at Symphony Limited, said the Budget has broadly covered components that are favourable for corporates. “Tax relief to corporates comes as a much needed respite and is sure to create a better environment for businesses which will in turn lead to the growth and economic development of the country,” Bakeri said.

Hailing the government’s decision to create a separate payment platform for the MSMEs, Jaimin Shah, MD & CEO, of Ahmedabad-based Dev Information Technology Ltd, said, “Introduction of benefits such as as loan of Rs 1 crore under 59 minutes for MSMEs through a dedicated online portal and the Interest Subvention Scheme shows that the government is serious about making MSMEs an important growth driver to achieve the vision of becoming a $3 trillion economy.”

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