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Budget 2019 expectations: ‘Govt needs to take fiscal measures to address NBFC liquidity crisis’

Budget 2019 Expectations India: In her budget, Sitharaman will have to address slowing economy, financial sector troubles like rising NPAs and liquidity crisis in NBFCs, job creation, private investments, exports revival, agrarian crisis and raise public investment without compromising on fiscal prudence.

By: Express Web Desk |
Updated: July 5, 2019 8:06:18 am
 budget 2019, budget 2019 expectations, budget 2019 india, budget 2019 expectations india, budget 2019 india expectations, budget 2019 slab rate, budget 2019 income tax slab, budget 2019 tax rates, budget 2019 slab rates, income tax slab, budget 2019 for farmers, budget 2019 for income tax, budget 2019 date, budget 2019 india, budget 2019 date in india, interim budget 2019 Budget 2019 India: Union Finance Minister Nirmala Sitharaman along with Minister of State Anurag Thakur holds a pre-budget meeting with representatives of industry, services and trade sector, in New Delhi (File PTI Photo/Shahbaz Khan)

Budget 2019 Expectations: The first Union budget of the current NDA government will be presented by Union Finance Minister Nirmala Sitharaman on July 5. The Finance Ministry has indicated that it will retain the interim budget allocations which were chalked out in February, in the run-up to the Parliamentary elections.

But Sitharaman has her task cut out. Data on GDP released within a few hours of her occupying the seat in North Block showed the growth rate for January-March 2019 slipping to 5.8 per cent compared to 8.1 per cent in the corresponding period last year.

In her budget, Sitharaman will have to address slowing economy, financial sector troubles like rising NPAs and liquidity crisis in NBFCs, job creation, private investments, exports revival, agrarian crisis and raise public investment without compromising on fiscal prudence. The government will present the Economic Survey on July 4.

Here is what the market leaders expect from the upcoming budget:

Raja Lahiri, Partner, Grant Thornton India LLP

“With the government embracing technology and the need for more innovation, focus on an integrated policy on digital, tech, cyberspace, and innovation coupled with the right measures of incentives would boost the growth, technology, and digital agenda for India.”

“On the tax front, incentives to technology units in SEZs, enhancing the popularity of share-based reward schemes by postponing the point of taxation, and clarifying certain international tax questions on permanent establishment and demand-based tax proposals will help.”

Anuj Puri, Chairman – ANAROCK Property Consultants

“The liquidity crisis is the major factor preventing completion of over 5.6 lakh stalled units across top 7 cities. For this, the government could possibly increase the finance limits for NBFCs – a major source of funding for developers. This will help revive the sector to a large extent.”

“Besides NBFCs, the government must take steps to ensure bank funding to developers as the severe fund crunch is contributing significantly to project delays.”

Shahnaz Husain, CEO of Shahnaz Husain Group, Beauty Expert

“As far as the beauty business is concerned, we have high hopes and expectations from the upcoming full and final budget to be released on July 5, 2019. The government’s emphasis on ‘Make in India’ has been very encouraging for the industry, especially for entrepreneurs who use indigenous raw materials in their products. Moreover, skill development in this space will nurture the talents of freshers while creating new jobs for them. It will also give more opportunities to skilled workers and beauticians who can help the new candidates excel in their respective domains.”

Sumit Sood, Head of India & Asia Pacific, GlobalLogic

“Our vibrant democracy and strong economic growth, provide a unique opportunity for India to lead the world into the digital future. Would be fantastic to see a budget that provides an impetus for investments into technologies that enable an environment-friendly and transparent future. Leveraging technologies like AI & drones for water conservation, agriculture management etc. and Distributed Ledgers for transparency in public spending and record keeping can help India take a huge leap forward.”

Mahesh Makhija, Partner and Leader, Digital and Emerging Tech, EY

“With the goal of making India a $5trillion economy by 2024, the government is likely to introduce measures in the budget to encourage growth of start-ups, especially in new growth industries like AI and machine learning. We would expect the government to further expand on the measures announced in the interim budget and allocate additional funds to support deep tech segments like AI, Robotics and Machine Learning.”

Surendra Hiranandani, Founder & Director, House of Hiranandani

“The Indian real estate sector is the most highly taxed with the combination of high direct and indirect taxes, stamp duties and levies for development approvals. These extraordinarily high taxes coupled with high interest rates have been crippling growth. To bring back growth in the sector which is so vital to any developing economy, we expect Government to impart industry status to the sector which would enable developers to cut capital costs and pass on the benefits to consumers. The government should speed up its measures for infrastructure development which will ensure cheaper land for housing and push affordability.”

“Apart from these, elimination of taxes on vacant property, dropping circle rates section from Income Tax Act, ensuring tax rationalization on REITs and lowering costs of land acquisition are some of the measures that will positively impact the sector.”

Manas Mehrotra, Chairman, 315 Work Avenue

“The companies are expecting that the government would enable co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions. This would check the increased outflow of cash that co-working firms are currently experiencing. The firms are hoping that input tax credit under GST be extended to developers so that it is passed on to companies who lease out space and thereby reduce their overall costs. This would significantly aid faster growth of co-working business in the country.”

“Co-work firms are looking forward to developments in the government’s smart cities initiative, as companies are looking for improvement in infrastructure to expand in metros and make a move into Tier II and Tier III cities too.”

“Co-working firms are also expecting that the government would curb or altogether eliminate angel tax this Union budget as it would enable the firms to lease more spaces for start-ups, enterprises, MSMEs and entrepreneurs.”

Manju Yagnik, Vice Chairperson at Nahar Group

“As the interim budget is ensuing in the coming days we expect the realty sector to see a complete revival. To maintain its position as one of the fastest growing economies, the budget needs to be a healthy mixture of everything and assure economic and financial growth. Solving the liquidity crisis over NBFC’s by increasing the financial limits is necessary for benefitting the developers at large. Also, to attract more foreign investments it is crucial to build a stronger infrastructure for profitable incentives to be bought into the sector. If the housing loan rates are reduced, it will provide major tax relief and benefits to homebuyers and investors alike. Real Estate sector being a significant contributor to the economy needs a multiplier effect for efficient economic growth.”

Shishir Baijal, Chairman & Managing Director at Knight Frank India

“The Non-Banking Financial Companies (NBFC) capital crunch has been negatively impacting the developer community and the real estate sector as a whole. NBFCs had come to be the primary lenders for most builders and developers in the last four-five years. But as they now have no capital to lend, they are not even honouring their prior commitments, including finance for construction costs; stalling many under-construction residential projects across India. The government needs to take fiscal measures to address the worsening NBFC liquidity crisis. Permission to issue tax-free bonds to raise capital will be a prudent step in this direction.”

Anil Valluri, President, India and SAARC Operations, NetApp

“Through the Union Budget 2019, it would be key for the Government to put the spotlight back on its flagship initiatives like Digital India enabling digital infrastructure as a utility to every citizen, governance and services on demand, and digital empowerment of citizens. With the help of technology, the government should focus on catalyzing the smart city programme, to become growth engines for the country’s economy. We definitely look forward to see the government fortify the investments in the Artificial Intelligence sector as indicated in the interim budget, so that the benefits of AI technology can reach the masses.”

Deepak Maheshwari, Director of Government Affairs, India, ASEAN & China

“To foster trust in technology and bolster overall security, it is imperative that India enhances its cyber security readiness and posture, especially in the critical infrastructures including governance, banking and financial services, energy, telecom and smart cities. The budget should mandate setting aside 10% of the respective technology budgets for every government project exclusively for cyber security, as per the recommendations of the NASSCOM Task Force set up in response to the Prime Minister’s behest.”

Dr Kushal Banerjee, Homeopath, Kalyan Banerjee Clinics 

“Ayushman Bharat and the central government health schemes need a substantial injection of funds for the provision of homeopathic health services in the centres covered by them. Thousands of homeopaths need to be employed and posted at these centres to meet the increasing demand for these services. Reliable supply and ready availability of homeopathic medicines can only be ensured by increasing funding for homeopathic services. Homeopathy plays an important role in preventive health and in tertiary care. Palliative treatment, in terminally ill patients, for example, can be cost effectively provided by homeopathy. This can greatly reduce the burden on existing health infrastructure.  Recurrent infections, allergic conditions, a large number of skin conditions are just some areas where homeopathy is able to provide a far more cost effective, and permanent solution to the patient.”

Sandeep Sabharwal, CEO, SLCM Group

“Finance in agriculture act as a key to farmers. But farmers’ money is always inadequate and he needs outside finance or credit. Because of inadequate financial resources and absence of timely credit facilities at reasonable rates, many of the farmers, are unable to go in for improved seeds and manures or to introduce better methods or techniques.”

“In the given situation, the role of agricultural NBFC’s becomes extremely important. By bringing farmers to the financial system these NBFC (Non-Banking Financial Company) accelerates the process of financial inclusion in the country. We have seen in successive budgets that government has made cheaper credit pools available to institutions like NABARD who have further gone ahead and given those financing activity to agri-processing and agri-infrastructure but we have not such seen such cheaper pool of credit available to agri-NBFCs.”

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