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Union Budget 2018: Two-Wheeler Makers Feel Positive
The reason behind this optimism for the two-wheeler manufacturers is the Union Budget 2018’s strong focus on rural and infrastructure sectors
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The Union Budget 2018 brought a ray of hope and positive feeling for Indian two-wheeler manufacturers. The reason behind this optimism is the Budget 2018’s strong focus on rural and infrastructure sectors.
On Union Budget 2018, Sudarshan Venu, Joint Managing Director, TVS Motor Company, said “The Union Budget 2018/19 demonstrates government’s intent to boost investments in rural development, education, healthcare and social sectors and will lead to continued and inclusive economic growth. The strong push for infrastructure will also support this growth agenda.”
“The government’s focus on supporting local manufacturing, skill development under Pradhan Mantri Kaushal Kendra and a heightened emphasis on job creation will lead to greater opportunities for the youth of the country.”
Pawan Munjal, CMD of Hero MotoCorp, applauded the Budget 2018 by saying “The Budget lays significant emphasis on empowering farmers and boosting the rural economy, and rightfully so. This budget aspires to narrow the gap between rural and urban India. The farmer is a key component of the value chain and keeping his interests at the core of the efforts to boost rural economy and infrastructure is wise thinking. Ensuring a minimum support price which is 1.5 times the cost will amplify the rural incomes and boost consumption, which in turn will contribute to holistic economic growth.”
As per Subrata Ray, Senior Vice President and Group Head, Corporate ratings, ICRA the impact on two-wheelers will be marginally positive.
“The budget focussed on enhancing farm incomes through improving crop realisations following policy of linking minimum support prices for Kharif crops with margin of minimum 50 per cent over cost of production, budgetary allocations for strengthening of Agricultural produce market committees (APMC) and Gramin Agricultural Markets for better price discovery.”
“Additionally, enhanced allocations for various rural focussed employment and infrastructure development schemes as well as higher agricultural institutional credit targets also indicates farmer welfare being a priority for the government. Given that demand for entry level motorcycles, has strong dependence on rural markets, such initiatives that allow expansion of farm income as well as provide higher access to credit for agricultural use augur well for the sector.”
“However, the increase in import duty on CKDs and CBUs may result in price increases and may have some impact on demand of super premium motorcycles,” added Ray.
In the Budget 2018, the government has allocated Rs 5.97 lakh crore for infrastructure sector.
While, for the rural economy, the Budget has some really interesting announcements. Minimum Support Price for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops. The Institutional Farm Credit has also been raised to 11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.