What Do Investors Get From Budget 2018?
It was agriculture, health, education, Infrastructure building and rural India that was the focus area for Finance Minister Arun Jaitley when he scripted the Budget 2018-19. Now, what is in his Budget for investors who have been trying to make their fortune in real estate? It may have been a bit disappointing for investors who were eying direct benefits. However, not all is lost. Some provisions as laid out in Budget 2018 may work out well if implemented in a timely manner and true to its spirit. Here's a look.
The corporate tax rate for companies with an annual turnover of Rs 250 crore was reduced to 25 per cent from 30 per cent. Real estate developers were looking at a cut that would bring the number to somewhere between 18-25 per cent. However, industry insiders cheer it as a mini bonanza. "Reduced corporate tax by 25 percent extended to companies, with a turnover of Rs 250 crores to benefit small, micro and medium enterprises will give relief to builder fraternity," says Deepak Kapoor, President, CREDAI Western UP.
In its latest update, the International Monetary Fund forecast that India will grow at 7.4 per cent in the upcoming year. Jaitley emphasised that the manufacturing sector had regained its health and other services had also climbed with high growth rates of over eight per cent. However, data released on January 31 showed growth of the eight core sectors slowed to a five-month low of four per cent in December 2017 due to the negative performance of segments such as coal and crude oil.
Despite this, data show 56 lakh new names were added to the list of tax payers after the measure was launched to curb tax evasion. This is also an indication that there has been an increase in the number of jobs. By the end of 2016-17, there were 8.27 crore effective taxpayers. The Pradhan Mantri Mudra Yojana is believed to have assisted and helped add 10 crore jobs. However, the FM has acted a miser when it comes to providing sops to this segment of taxpayers.
Jaitley also said that 70 lakh more formal jobs would be created this year. If this data that the government is referring to is to be banked upon, investors can be confident about the slow but steady growth in the economy, jobs and hence consumption and a consuming market is the perfect blend for investors- big or small.
Business gets easy
Quoting the findings of the World Bank's Ease of Doing Business where India climbed up by 30 positions breaking into the top 100 for the first time, Jaitley said that was proof that doing business had got seamless over the past few years. The reality may not have been so rosy but the report also indicated that while economic expansion had slowed over the past few years, the future remains bright and businesses continue to invest in the country. Among industries that are flourishing include outsourcing, telecommunications, construction, education and retail. This is again a mini-cheer moment for an investor who is shopping around for clues suggesting a stronger economy.
India is becoming smart quite fast. Projects worth Rs 2,350 crore have been completed while many are in various stages of construction, official data show. For investors both domestic and foreign, there is huge scope to benefit out of these.
With Mumbai's transport system being expanded to add 90 km of double line tracks plus 150 km of additional suburban network, the tinsel town is set to appeal to investors. Bengaluru, too, would get about 160 km of suburban network inviting and attracting not just the talent pool but resultant housing demand meaning good times for investors.
The Mumbai-Ahmedabad bullet train that was launched in September last year could see bright days with manpower to operate the same being trained. Once operational, all the areas along the route would help investors to break into with business opportunities.
As the government targets better regional air connectivity, businesses would benefit greatly.
“Our country needs massive investments estimated to be in excess of Rs 50 lakh crore in infrastructure to increase growth, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services to our people,” the FM said in his Speech. For investors, this looks like a great opportunity.
Expectations prior to the Budget
Industry experts were of the opinion that for consumption to pick up in the real estate sector, the first Budget after the introduction of the Goods and Services Tax (GST) should have focussed more on acchhe din, a code-word for employment opportunities. However, the finance minister threw up numbers indicating that new employment has gone up already and therefore there was not much discussion around it.
In an interview with a news channel, Sanjaya Baru, secretary-general, the Federation of Indian Chambers of Commerce and Industry said that given that there were no data on job creation, numbers were just references. The economy can only pick up if private investments go up with more focus on domestic investments. The focus should have been to get the local investor go investing. Clearly, the Budget doesn't give any direct indicators about it being pro-investors but one could fish deeper and as they say, read between the lines.
The arduous task to serve the interest of 1.25 billion Indians thus rested upon Jaitley's shoulders, a task that he may not have been able to accomplish. However, lets hope that with corporate taxes turning favourable for some, certain sectors doing exceptionally well, opportunities amidst smart cities and employment in such cities, the short-term and long-term investor has something to bank on.