Union Budget 2018 Industry Reactions
Mr. Jimmy Patel, MD & CEO, Quantum Mutual Fund
Most of the big corporations are already moving towards the bond markets to take advantage of the lower cost. Making it mandatory to raise one fourth of the total borrowing through bonds can push the supply side of the corporate bond market. But there is lot to be done to boost the secondary market which is essential to improve the price discovery mechanism. More steps need to be taken to improve the depth and liquidity in the bond market, while also strengthening the credit rating monitoring mechanism.
Fund Houses have to realign the income distribution strategy; dividend stripping may get controlled while the investors may end up paying tax even in the short term. This doesn’t augment well for the mutual fund industry as Ulips as per current reading are outside LTCG Tax purview and with commissions riding high on Insurance mobilization retail savings may get diverted to Ulips. The new proposed definition of equity oriented mutual fund is also grey in terms of equity fund of funds.
Mr. Raghavendra Pratap Singh (Co-Founder, i2iFunding)
i2i Funding connects verified borrowers wishing to seek loans from investors spread across India who are willing to fund them.
The Budget 2018-19 has been extremely encouraging for the startups, mainly operating in the Fintech sector. The government has shown a keen interest in evaluating the policy framework and formulating an institutional model to create a conducive environment for the development of the industry. Besides, government’s willingness to promote the use of blockchain technology to encourage digital economy may prove to be a growth catalyst for the P2P lending industry.
Imposing 10% long-term capital gain tax on equity investments may create some level playing field for the P2P lending industry. So far, the favourable tax treatment on long-term gains on equity investments made them a preferred choice for the investors. Now, those who are ready to take higher risk for earning better returns may also think of investing in P2P lending projects which have a better risk profile as compared to equity-oriented investments.
Mr. Kalyan Basu, MD & CEO, Invoicemart
(A.Treds Ltd. – A joint venture between Axis Bank Ltd. and junction services ltd.)
“The union budget of 2018 – 19 is focused on job creation, with heavy expenditure on supporting agriculture and allied activities to upgradation of infrastructure across airports, rail and road transport.
We are pleased with the announcements made to bolster the MSMEs. Higher allocation under Mudra loans, relaxation of corporate tax, to addressing the NPAs and stressed assets.
Linking of TReDS with GSTN is a major move which will enhance usability and credibility of TReDs platforms. Directing Public Sector Banks and Undertakings to be on TReDs platform will further help in increasing credit availability.
The Finance Minister has provided immense support to MSMEs with the intent of providing an impetus for growth through easier cash flows and investible surplus.”
Mr. Anshuman Panwar, Co-Founder, Creditas Solutions Pvt Limited
“The budget focuses on inclusive growth with significant thrust on empowering women, poor and farmers. I believe this will contribute to the holistic growth of India. Doubling the allocation for digital investments is a good move too and will help the country’s vision to be a digital-first economy.
The reduction in corporate tax for midsize companies will boost investments. Furthermore, the recapitalisation of Public Sector Banks to provide credit availability is also significant but its success will depend on the execution and implementation of the policy.
Quite significantly, the Finance Minister has acknowledged the role of Fintech companies in shoring up the credit market in India and his unequivocal support is a great news for all Fintech companies.”
Mr. Pankaj Razdan, MD & CEO, Aditya Birla Sun Life Insurance and Dy. CE, Aditya Birla Capital
“The Finance Minister has done well to present a prudent budget by focusing on generation of employment and inclusive growth through increased expenditure on rural economy, infrastructure, MSME and healthcare. Along with maintaining fiscal prudence, the government is clearly working towards creating a healthier India through Increased spend on the healthcare sector which will further lead to the next round of transformation forming the backbone of the economy. This budget is to offer double benefit of sustainable growth leading to improved standard of living and support long term growth prospects of the nation. A tax neutral budget for the life insurance industry also offers more credit play for the insurance companies. Additionally, ULIP emerges as a beneficial long term investment option under the new tax regime. Finance Minister’s move to merge and consolidate all the smaller insurance companies augurs well for the insurance industry. An overall economic growth and more people joining the formal economy will definitely give impetus to the growth of the life insurance sector”
Mahavir Chopra,Director – Health, Life and Strategic Initiatives, Coverfox.com
“The Finance Minister’s reinforced thrust on Digital India through measures like Wi-Fi Hotspots in rural areas will significantly increase internet penetration making India the largest internet enabled population in the world. Access to internet will create skilled jobs in rural areas, avoid migration, and increase reach of rural population to services (like insurance) available only in cities beyond reach.
Given the lack of enough public healthcare infrastructure, the proposal to launch a social security program with regards to public healthcare – the National Healthcare protection scheme that will support 50 Crore underprivileged with health financing is a welcome initiative that was long awaited.
While the increase in the health insurance deduction is a great step, given the recent hike in health insurance premiums for senior citizens, from an Insurance industry’s standpoint, the budget has not been encouraging. We were expecting waiver of GST for senior citizen health insurance, tax sops for insurance products like home and term life insurance (extremely low on penetration) that provide super-essential and currently absent financial security to the middle-class population at large.”
Mr. Manav Jeet is the Managing Director and CEO of Rubique
“Today’s budget announcements are certainly creating a headway for India to become the largest digital economies in the world. Right from ploughing the seed of digital in education, creating the infrastructure to connect villages to encouraging establishment of advanced technologies like Artificial Intelligence including research and development through Niti Ayog’s national programme will certainly help the existing market move towards digital.
Providing Infrastructural Support to MSMEs: MSMEs have been the focus even for Rubique. It’s the most important sector yet underserved segment when it comes to access to finance. Allotment of Rs 3 lakh crore for lending in FY 19 under PM’s MUDRA Yojana for MSMEs definitely bring cheers to them. Also government’s initiative to focus on process digitization & easing the loan sanctioning process will help & encourage the emerging fintechs like us which are taking efforts to digitize the ecosystem with increased acceptance by the ecosystem.
Focusing on Digitizing Banking: Although these initiatives will definitely help Fintech companies like us expand & help bridge the credit gap for MSMEs, we are also hopeful to see government coming up with special tech measures to bring out e-signature facilities within banks and enable access credit digitally removing the need for paperwork which usually delays the disbursal.
Bringing innovative tech support like Blockchain: We are yet to match the security measures implemented in developed countries, hence the decision to eliminate the use of cryptocurrencies and encourage the use if blockchain in payments sector is definitely a wise decision by the government. Although several banks have started adopting blockchain technology within their existing infrastructure, it will be note-worthy to see how this tech implementation is going to shape up the financial inclusion of the country.”
Harshvardhan Lunia, CEO & Co-Founder, Lendingkart Group
“The Union Budget for the year 2018 is in line with our expectations and requirements of the economy. The country is still reaping the benefits from forward-looking initiatives proposed over the previous financial year such as demonetisation, the GST rollout and the increased focus towards digitisation. The programs that have been announced for the rural, agriculture, healthcare and manufacturing sectors will drive essential growth. The continued focus on MSME’s with the allocation of over 3000 crores for credit support along with backing the efforts of FinTech companies’ will help in creating more avenues of financial inclusion for the underserved segment. Bank recapitalisation will also sustain these efforts by adding much-needed credit in the market. The emphasis on complementing existing digitisation efforts by connecting villages through high speed optic fibre networks and building Wi-Fi spots will give an impetus to upcoming digital sectors that rely heavily on connectivity like FinTech and Edtech. We are happy with the current focus of the Government, as the country continues on the path of ‘ease of doing business’ it is great to see strong emphasis being put on ‘ease of living’ for the masses.”
Ranjit Punja, CEO & Co-Founder, Creditmantri.com
“Digitisation and formalisation seems to be the mantra, with the Finance Minister stressing on the growing digital economy and increased allocation to aid digital transformation. The government initiating a new plan on NPAs also shows the importance of rising bad loans with India currently ranking 5th in the world. We hope that this plan would help shift focus on the importance of good credit as a countermeasure. By setting the target of disbursing Rs.3 lakh crore through the MUDRA Yojana for the next fiscal is a commendable step towards inclusive funding.”
Amitabh Chaturvedi, Managing Director, Essel Finance
“As anticipated this is certainly a well balanced budget keeping in mind the politics, election and solid long term economic growth. We did see a good emphasis on rural economy and could term this as an inclusive budget for the lower strata of society. At the same time, the development of the country as a whole continued to be the focus of the Financial Minister, with favourable announcements for the infrastructure and tourism industry. Reduction in corporate taxes is definitely a good initiative, given the impact GST has had on some sectors. I also support introduction of long term capital gain tax as this is one way to track and control tax evasion by many. Overall this is definitely a positive budget for the nation and the economy.”
Rajiv Shastri, Executive Director & CEO, Essel Mutual Funds
“The budget addresses rural and farm distress in a targeted manner by pinpointing root causes and providing solutions to the problems faced. And it does so without breaking the bank by pragmatic use of its tax tools. The reintroduction of Long Term Capital Gains tax is a step towards restoring the Bharat – India balance. At the same time, grandfathering of gains till January 31st 2018 for the purposes of LTCG shows an unexpected level of sensitivity. The continuing focus on infrastructure is welcome, as is the increased allocation to asset creation. Providing a reasonable level of health insurance to close to 40% of the population is a massive step forward in poverty alleviation. At the same time, the government needs to be vigilant that this does not cause a huge spike in healthcare costs as has been experienced in other countries which have tried to combine insurance funded healthcare with private healthcare providers. Along with a slew of market focused measures, we believe that this is a very well balanced budget”.
Viral Berawala, Chief Investment Officer, Essel Mutual Fund
“Overall – Popular but not populist budget. Budget has targeted a large section of population through govt funded healthcare, increase in agri incomes and tax relief & funding (MUDRA) for SME and MSME. Fixed income view – Incoming bond supply, inflation, govt revenues and liquidity will drive bond markets in times to come. For now we see no reason to change our current view of staying invested in accrual driven products. On introduction of LTCG we don’t see significant change in investor behaviour”.
Brijesh Parnami, Executive Director & CEO Essel Wealth Zone
“A well balanced and so called populist budget keeping in mind the medium to long term economic growth of the country. Agricultural & Rural section of country as logically envisaged got the maximum focus as it is a priority area for the government. Covering 50 crs. lives under national health program is an iconic step and it’s the biggest in the world, done by any government. Lower tax rate for MSMEs would strengthen the sector further and would boost job creation opportunities. Continued focus on infrastructure, Digital Initiatives & Education sectors shows the long term approach of the Government. Overall a good & stable budget”.
