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Budget 2018 Reactions: The Investments, The MSP, The Reimbursement Scheme And All Of Those, Are Very Strongly Focused Upon, Rashesh C Shah

"The government has obviously put the rural and agriculture sector as a priority, which is very positive because it will fuel consumption and the GDP growth rate also," Rashesh C Shah, President, FICCI & Chairman and CEO, Edelweiss Group

In an interactive session organized by FICCI, Rashesh C Shah, President of FICCI and Chairman & CEO, Edelweiss Group, shares his views on the budget.

“I feel at first glance, there seems to be a strong focus, which was expected, around rural and agriculture sector. I think the investments, the MSP, the reimbursement scheme and all of those, are very strongly focused upon. Even the rural housing scheme, is a very strong one. So the government has obviously put the rural and agriculture sector as a priority, which is very positive because it will fuel consumption and the GDP growth rate also. The other positive is that they expect almost 7 million jobs to be created this year, which I think is a very strong positive. 7 million jobs for India is a fairly big outcome. The third constituency that they have focused on a lot is the MSMEs. So the entire 3 lakh crore scheme for MSME loans and Mudra, the income tax slab increase for the companies earning 50 crore to becoming 250 crore for becoming eligible for the 25% tax rate, is going to give a big large incentive to the MSMEs, who will in turn create jobs.

So I think credit to MSMEs, tax relief for MSMEs, seems to be under a strong focus. MSMEs and self-employed entrepreneurs especially women, even the women’s self-help groups for credit scheme is a very big strong positive of that. The fourth constituency Is the aam aadmi, especially the salaried people and the senior citizens, have a got a strong relief, both through standard deduction and the exemption of interest earned bank deposit for senior citizens. And it’s not a small increase, it’s a very significant increase, which is another very strong positive. As per expectations, I think this year they didn’t have room to give much relief to the corporate sector, which anyway the earnings growth momentum has started to pick up. So though all of us were hoping for a corporate tax rate cut across the board for all corporates. I think at best we can hope that this has been postponed by another year, and hopefully will be back on the table, when there is a little more room.

Two under things that are underestimates. The 18,000 crore disinvestment target looks very low, given the asset prices, where they are, and in the last year, FY18 also, the government exceeded that. We would expect that in the coming year also the government may end up exceeding the disinvestment target. And the other one is the slippage on the fiscal side by 30 basis points for both FY18 and expected FY 19. So we’re expecting 3.2 as the fiscal for FY18, which is now going to be 3.5 and people were expecting 3% for FY 19, which will now be 3.3. So approximately 30 basis points, which is approximately 50,000 crores of excess slippage on fiscal deficit, which was actually expected by the bond market. So the bond market is already priced at insuring, there is no rude shock in that, but for investors, especially bond investors who were hoping for no slippage, it might be a slight concern but I don’t think it’s a large amount, so it will get absorbed very easily now.

So I think that’s broadly the first cut analysis, there is still, as the cliché goes, ‘the devil is in the details’. But other than this, the other strong and huge scheme, we have to understand the details of that, they were talking about, is the health insurance scheme. Health insurance scheme, I think 5 lakh rupees cover, to more than 10 crore families. 10 crore families will cover almost a third of the families in India, so 5 lakh rupees per family per family health cover is a very strong one. The total coverage will end up becoming close to 50 lakh crores. So obviously we have to see how much the government is going to spend on this as insurance premium, but it’s going to be a fairly significant allocation. So I think overall, all these are the main highlights. “

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