Is Modi govt all set to expand India’s economy by 7-7.5 percent in 2018-19?

Needless to say, the much-awaited union budget of 2018 is the crucial one as the current Modi government made two very big financial decisions Demonetization and the implementation of GST (Goods and Sevices Tax) during its tenure. The budget is all set to be announced on February 1 by finance minister Arjun Jaitely. He has already begun the process by announcing the first phase of the budget session of parliament which is expected to conclude on February 9. On January 29, Jaitely has announced the economic survey 2017-18 in the parliament in which he has predicted that India’s GDP (Gross Domestic Product) to grow by 7-7.5 percent by 2018-19. But the main point if is it really going to happen? well, we think it’s too early to decide?

However, the recent economic survey suggested that India’s economy is “picking up quite nicely” and if it continues to remain the same there is great chance that it will expand by 7-7.5 percentage in the coming years. The Economic Survey for 2018-19 estimated a real GDP growth rate of 6.75 percent for the full year in the current fiscal.

Endorsing the pick-up in growth highlighted in the Economic Survey 2017-18, Prime Minister’s Economic Advisory Council Chairman (EAC-PM) Bibek Debroy was quoted by a news agency saying the Survey was a reflection of government’s commitment to growth and development.

“The real GDP growth rate is likely to be closer to 7.5 percent rather than 7 percent. The Survey was optimistic in its tone because of government’s commitment to carry forward structural reforms like Goods and Services Tax, deregulation measures, bank re-capitalization and resolution through the Insolvency and Bankruptcy Code process,” said Debroy.

India has one of the fastest growing service sectors in the world with an annual growth rate of 9% since 2001, which contributed to 57% of GDP in 2012–13. However, India’s economy slowed to 6.1 percent in the fourth quarter ending March 2017, compared with 7.1% in the previous quarter, following Modi’s note ban decision which was extremely criticised by the opposition party and several economists for putting a poke on India’s growth story.

The agricultural sector is the largest employer in India’s economy, however, it has failed and contributes to a declining share of its GDP (17% in 2013–14). So keeping in mind about the same the upcoming budget is also expected to hold some extra importance on the agricultural sector.

From expecting some relief in the tax slab to seeking some growth in the rural sector, expectations are really high from Arun Jaitley in hope of some relief, especially for the commoners. So it will be interesting to see if the Modi government will stand straight on people’s expectation or not?

Meanwhile, we would like to draw your attention towards some interesting facts about Union budget 2018 which we bet you aren’t aware of. So start scrolling:

1. Did you know that until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of February?
2. Did you that a customary ‘Halwa ceremony’ has also been performed as a part of the Indian tradition of having something sweet before starting an important work?
3. How about this one? did you know that Former Finance Minister Morarji Desai presented the budget ten times, the most by any others?
4. He also became the only finance minister to present the Union budget on his birthday.
5. Did you know that Indira Gandhi, the then Prime Minister of India, took over the Ministry of Finance to become the only woman to hold the post of the Finance Minister?

Is Modi govt all set to expand India’s economy by 7-7.5 percent in 2018-19?

Budget 2018 may broaden Ujjwala to light up rural housing scheme too

The National Democratic Alliance government’s flagship cooking gas scheme is likely to be linked to the rural housing scheme in order to provide wider coverage. An announcement on widening of the programme is likely to be made in Thursday’s Budget.

Officials said the Pradhan Mantri Ujjwala Yojana (PMUY) and the Pradhan Mantri Awas Yojana (PMAY) might be linked, which would add 10 million beneficiaries of the rural housing scheme automatically. In addition to this, the mandate of the PMUY is set to be expanded from 50 million to 80 million with an additional budgetary support of Rs 48 billion. The Scheduled Caste and Scheduled Tribe category, even if not below the poverty line, may also be included in the expanded programme.

“Providing additional allocation to the PMUY is expected to be a part of this Budget. The PMUY has invited global attention as it changed the lives of more than 30 million rural women,” said Debasish Mishra, partner, Deloitte Touche Tohmatsu India. The beneficiaries of the PMAY (Gramin) are largely poor rural families without houses or which are living in houses with less than two rooms. The Narendra Modi government had identified 29.5 million such families under the socio-economic and caste census (SECCC) of 2011, of which 10 million are to be provided housing by March 2019 and the rest by 2022.

The PMUY, which was launched on May 1, 2016, in Ballia district in Uttar Pradesh with a target of providing 50 million gas connections in three years to families living below the poverty line, has already covered 33.41 million consumers in 712 districts. “The government has allocated Rs 80 billion as budgetary support through which each family is receiving Rs 1,600. This is set to be increased by another 30 million now,” said an executive with an oil marketing company (OMC).

PUMY connections are now being given in the names of women, but oil companies are likely to do away with this condition and provide connections to men as well.

Interestingly, this comes at a time when questions are being raised on the number of refills that BPL families are taking under the PMUY. “When a normal consumer is refilling at an average 7.76 times per year, the rate of refill in the PMUY is 3.8 times per year. The number of consumers who have not come back for a second cylinder is only 15%,” said Sanjiv Singh, chairman of Indian Oil Corporation (IOC).

According to data available with the government, nearly 80% of Ujjwala consumers come back to the OMCs for a second refill, while 45% take three or more refills in a year. In order to maintain regular connection with new consumers and to sensitise them about the benefits of using liquefied petroleum gas (LPG), OMCs like IOC, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation had recently initiated a concept called LPG Panchayat in rural areas.

On the back of the successful launch of the PMUY during the last financial year, LPG consumption witnessed a rise of almost 10% to 21.5 million tonnes from 19.6 million tonnes during 2015-16. “We are expecting a similar increase this year,” Singh added.

Budget 2018 may broaden Ujjwala to light up rural housing scheme too

Union Budget 2018 LIVE: Know Arun Jaitley’s income tax budget 2018

Finance Minister Arun Jaitley will present the Budget for financial year 2018-19 on Thursday. In the last Budget, Finance Minister Arun Jaitley left the income tax slabs unchanged but gave a marginal relief to the small taxpayer, in the form of reduction in the rate from 10 per cent to 5 per cent for individuals having an annual income between Rs 250,000 to Rs 500,000.

This year too, taxpayers are waiting anxiously to know whether the government will, in Budget 2018, tweak income tax slabs and rates to bring down the burden on individuals.

ALSO READ: Budget 2018: Govt may raise equity investment limit for PF bodies

Jaitley will tomorrow present the current NDA government’s fifth and arguably his toughest Budget yet as he seeks to address agriculture distress, create jobs and boost growth while at the same time stick to fiscal prudence.

Union Budget 2018 LIVE: Know Arun Jaitley’s income tax budget 2018

Hedging gets pricey for sky-high Indian stocks before Budget 2018

Investors in Indian shares are growing increasingly anxious after a stellar rally.

The India VIX Index, which measures the cost of NSE Nifty 50 Index options, has risen the most since September 2016 in January, climbing in tandem with the equity gauge. While the trend has been similar in the US and other Asian markets, it’s especially pronounced in India, where five straight weeks of simultaneous gains marked a record.

With Finance Minister Arun Jaitley readying to deliver the Union Budget 2018 on Thursday, traders are seeking to hedge a rally that has added more than $425 billion in equity values in the past four months. The Nifty, which has already hit 13 records in January, trades at 18.4 times estimated earnings for the next year, near an all-time high and a 30 per cent premium to the MSCI Asia Pacific Index.

The fact that the India VIX and Nifty have been moving together “reflects the rising wariness in the market around the rapid run up in prices” Sunil Sharma, chief investment officer at Sanctum Wealth Management Pvt. in Mumbai, said by phone. “Investors are focused on the budget and monetary policy, and concerns that fiscal targets may not be met due to more spending on the social sector and infrastructure. We’re advising clients to hedge their stock purchases.”

The equity rally paused on Tuesday after a global selloff started in the US reverberated across markets. The Nifty lost 0.7 per cent, the most since Jan. 1, while the India VIX tumbled 8.2 per cent, both gauges still moving in unison for an eighth day, the longest streak since 2013.

Traders have boosted hedging this month, with almost 1.3 million bearish Nifty options changing hands each day on average. That’s 22 per cent more than call volume, the highest proportion since August 2010, data compiled by Bloomberg show. Five of the six most-owned contracts are puts expiring in February, with those protecting against a 5 per cent decline having the largest open interest.

Some investors say stocks are due for a reversal following the strong inflows of late. While agriculture and infrastructure companies are seen benefiting from higher government spending, the uncertainty over the pace of fiscal consolidation will be the key risk, according to Nomura Financial Advisory & Securities India Pvt.

“Investors are insulating from the big event risk by buying protection even at higher volatility,” said Vaibhav Sanghavi, co-chief executive officer at Avendus Capital Alternate Strategies in Mumbai, whose firm manages $630 million in assets. “We expect volatility to cool off after the budget.”


Hedging gets pricey for sky-high Indian stocks before Budget 2018

Budget 2018: FM Arun Jaitley should grant industry status to retail sector

Budget 2018 should be a game changer for the retail sector and we expect Finance Minister Arun Jaitley to grant the much-needed industry status to the sector this year.

“The Retail sector is a significant contributor to the economy which has the potential to generate twice as many jobs as compared to what it does currently. But it should get impetus from the government to create an ecosystem backed by favorable regulations and strong domestic R&D. With the current government’s continuous endeavor to correct the financial structure of the country, it is the best time to grant industry status to the retail sector as this will provide the sector with easier access to the finance and attract more investments.

We expect finance minister to consider simplification of GST procedures along with lowering of taxes and announcement of initiatives that can stimulate domestic manufacturing.

Consumer appliances like mixer grinders and juicers are no longer considered luxury. Such consumer appliances need to be made more affordable to the consumers and be put in a lower tax bracket from 28 percent to 18 percent.” He added.
Ravi Saxena is an entrepreneurial CEO and a builder of businesses. Ravi is an alumnus of IIM-Ahmedabad, India’s finest management institute, and one of the best in the world. He accomplished his Electronics Engineering Degree from the prestigious Delhi Institute of Technology. He has had 15 years of his 20 years of experience as CEO and MD of major Multinational Organizations in India. He has a track record of launching new concepts and taking them to success.

Having built 11 distinct businesses from scratch, in services sector, he has a solid grip on launching businesses, growing them and creating shareholder value. He has extensive global exposure and has participated in projects and workshops in over 35 countries across 5 continents. Ravi’s passion is Sales, Marketing, Projects and Business Strategy supplemented by strong financial skills and clear HR perspective.

Currently Ravi runs his own business in Retail and Management Education.

He is the Indian partner of the prestigious Italian University, Bocconi and has recently launched a top-end Business School in Mumbai.

He along with Celebrity chef Sanjeev Kapoor launched Wonderchef in the year 2009.

About Wonderchef

Wonderchef Kitchenware is a company born out of the ‘love of cooking’. Driven by passion of making Kitchen the Centre of wellness and goodness in homes, Wonderchef was created by two enthusiasts, Mr. Ravi Saxena and Chef Sanjeev Kapoor in 2009. They believed in kitchen being the ‘heart of the home’, as it inspires us every day to create lasting memories with the food we cook for our loved ones. This is why the entire range of Wonderchef Cookware and Appliances is a perfect blend of health, taste and convenience that inspires us to ‘cook with pride’. Wonderchef products are used in millions of homes in India where healthy and convenient cooking is a part of lifestyle.
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Budget 2018: FM Arun Jaitley should grant industry status to retail sector

Budget 2018: Education sector expects its much-needed boost from FM Jaitley

There are many eyeballs on the Union Budget 2018-19 not just because it is the last full-term budget before the 2019 elections but it is also the first after GST rollout. The education sector is slated to get its much-needed boost with school education expected to get 14% hike compared to the last year’s budget. The publishing industry also has big expectations from the government this year, expecting some bold moves.

Focus on Infrastructure and Digitization

‘Digital India’ was Prime Minister Narendra Modi’s flagship programme launched in 2014 with a vision to transform India into a “digitally empowered society and knowledge economy”. It focuses on addressing the issues related to technology in the education sector.

Various MNCs have leveraged this to empower students in India, offer skill development programmes, and use technology to reach out to the teachers and youth across the country. For example, Microsoft partnered with 12 state governments to build ICT skills in 8 lakh government school teachers under Project Shiksha. Similarly, Project Saksham is helping bridge the digital gap in higher education institutes, impacting 71 universities by integrating technology into classroom to increase creativity, accelerate learning, and bolster collaboration.

However, the structural issues in India’s higher education system are the root cause behind the demand-supply gap in the skill market. Private institutes, which account for two-thirds of higher education in India provide the finest education in the country. However, there are huge barriers for these institutions at every level – entry, operations, and exit.

Restrictions exist on the entry of foreign universities, foreign collaboration, and foreign faculty. Though there is a 100% FDI in the education sector, the clause doesn’t come without riders. According to the FDI policy for the education sector, a foreign entity can invest 100% in India but as a not-for-profit organization. Furthermore, only section 25 companies with no foreign investment can invest in institutes. If the government provides relaxation for these bottlenecks, foreign institutes and companies will be more than willing to invest in exchange programmes, distance education, and faculty exchange programmes with the existing Indian institutes.

Tax Rebates for Education Loan

The benefit for eight financial years was introduced in 2006 when the cost of education was not high. However, today, an average four-year engineering course costs INR 8 – 9 lakhs and an average medical degree costs INR 12 – 14 lakhs. The current interest rates on education loans range from 10.5% to 13.5%. Therefore, an average borrower will most likely need more than eight years to repay the loan. The education sector, including students and parents, are also anticipating relaxation in education loan under Section 80C.

Tax relief

In March 2017, an amendment denied tax relief for higher education institutions; according to Assocham, this must be immediately withdrawn. Furthermore, the chamber has also highlighted that private universities and higher education institutions are facing serious financial challenges related to high capital requirement and non-availability of financial concessions.

Higher educational institutes and private companies need enough financial aid to build capacity and solve the tax burden to be able to provide quality education in India. The chamber has additionally suggested to increase the education cess to seek higher public expenditure on education across schools, universities, and advanced institutions.
Outlook for publishing sector in the coming years.

The government has already slated a higher budget for the education sector this year keeping in mind the concerns related to the growth of education sector. Therefore, it is anticipated that there will be necessary actions in place to provide a boost to the education sector as well as the publishing sector to improve the quality of education, increase the impact of technology, and provide necessary financial reliefs for private institutions. This will help in better foreign collaborations, better outside-in perspective, and a higher student and teacher impact in India.

Budget 2018: Education sector expects its much-needed boost from FM Jaitley

Budget 2018: India Inc wants GST reforms, friendly-business policies

Tabled in Parliament on Monday by Finance Minister Arun Jaitley, the Economic Survey has estimated that the Indian economy will grow by 7-7.5 percent in 2018-19, re-establishing India as the world’s fastest-growing major economy.

Every budget rides high on the expectations of taxpayers and the finance minister has a challenging task of balancing tax cuts and increased revenues and here’s what India Inc expects from Budget 2018:

“Considering the government’s vision to achieve Housing for All by 2022, we believe affordable housing development requires a long-term perspective supported by easy home finance at very affordable interest rates. It is therefore, the honourable finance minister must offer sizeable support to the urban middle-class population in terms of higher limits of exemption on home loans in the Budget 2018-19. The housing finance companies like us have a key role to play in boosting the government’s efforts towards affordable and low-cost housing in metros as well as in tier-II and III cities,” said Monu Ratra, ED and CEO, India Infoline Housing Finance Limited.

For the real estate sector, long pending demand of its recognition as industry, increase in tax rebate limit and single window clearance are among key expectations of the leaders.

Getamber Anand, Chairman, CREDAI and CMD, ATS Infrastructure Ltd. said, “The real estate opportunity to boost GDP mustn’t be missed by the Finance Ministry in this budget. We expect government to increase the exemption limits for deduction of interest from the income of the middle class and salaried homebuyer. Also the interest rates must further be rationalised as must tax rates as the burden is ultimately passed onto the consumer.”

He further elaborated, “On the supply side, we respect the changes that the government brought in last year into the sector by giving it “Infrastructure status for affordable housing”, but RBI has not given any directions to the banks per se on reducing cost of capital for projects which qualify as infrastructure. Also under section 80 IB, the push for smaller houses is welcome but we have requested the government to increase the size from 30 and 60 sq. m. to 60 and 90 sq. m. because this is a practical size which is even aspirationally more attractive to the homebuyer.”

“Also for smaller towns the condition that 80 percent of FSI must be achieved is not practical and should be reduced to about 50 percent. Having said that we are very hopeful that the government in its wisdom like last year will bring in some new exciting announcements for the real estate sector this year too,” he added.

“We expect the honourable finance minister will announce increased tax rebate limit, so that the consumers may find more disposable income to buy their chosen dream homes. He should also give a sympathetic ear to the long pending demand of introducing single window clearance system in this budget to help the developers fulfil their promises to home buyers and ensure timely delivery of projects. We also expect the government to grant industry status to real estate sector to facilitate ease of doing business and access to construction loan at a cheaper cost. At Solitaire Group we aim to develop a slew of international quality residential projects and industry status, if granted, will surely become instrumental in turning our dreams into reality,” said Arjunpreet Singh Sahni, Executive Director, Solitaire Group.

Budget 2018: India Inc wants GST reforms, friendly-business policies
Pankaj Kumar Jain, Managing Director, KW Group said, “We have a lot of expectations from this year’s budget as the real estate sector is completely marred by rising input cost and week buying sentiments. We expect the honourable finance minister to announce a specific mechanism to regulate the cost of key raw materials like cement and steel to help the industry produce affordable housing units for the masses. Such an announcement will also strengthen the spirit of Housing for All initiative. We also demand that the government should immediately grant industry status to the real estate sector and open new avenues of financial support for the developers.”

“We expect finance minister to recognise real estate as an industry in the upcoming budget since it stands as a major contributor in economical growth of the country by providing employment to millions and supporting various ancillary industries. This would certainly have a bearing on overall project costs since developers would be able to raise funds at lower rates and cut down on capital costs, eventually bringing solidity to the realty segment and turning GOI’s dream of “Housing for All by 2022″ a reality soon. Single-window clearance and cheaper home loans would be a blessings to revive the stagnant growth and to lure homebuyers to invest in this sector,” added O P Agarwal, CMD, SIR Group.

“There is a crying need for opening new avenues of financial support from the government in this budget to effectively manage the overall resources in a manner to enhance productivity using innovative technologies. The Indian manufacturing sector is already on the cusp of growth led by innovation and we look forward to a slew of strategic announcements in the Budget for the year 2018-19, so that the industry may realise its full potential soon. In a nutshell, we are looking forward to an industry-friendly budget with designated funds allocated to accentuate the growth of the industry over the coming years,” said Nitin Aggarwal, CEO, Prayag India.

“With the Government’s continuous push towards speedy initiation of IT, digitisation and various technology-driven initiatives, we are very positive about the upcoming Union Budget 2018-19. Industry friendly moves like the simplification of Customs procedures and relief in GST rates are among our key expectations. We would also hope that in this budget the Government will take the spirit of Make in India several notches higher by introducing efficient policies to promote domestic manufacturing of future-proof technological IT products.” said Lalit Chaturvedi, Asst. V.P. Marketing, Kyocera Document Solutions India.

Maneesh Mathur, VP – Sales and Marketing, King Koil said, “We expect this year’s budget to benefit consumer at large by rationalisation of personal income tax slabs so to increase purchasing capacity of Indian families and encourage them to invest in lifestyle products also which eventually affects the way they live and even sleep. Currently, cost of living is highly accentuated by rising inflation hence tax relaxation and more money available with the people would stimulate demand for industries, ultimately furnishing a boost to economical growth of the country.”

Arush Gupta, Director, Okaya said,”We expect the upcoming Union Budget 2018-19 will surely drive the next wave of growth in water purifiers and power back-up industry which is keenly awaiting conducive business environment to unleash its full potential. Union Budget 2018-19 should also continue the subsidy on lead acid batteries. We wish the honourable Finance Minister would offer a wide range of benefits in this budget to those manufacturers who are following all the rules and regulations.”

The healthcare sector has also pinned high hopes on the upcoming budget, as Siddharth Gupta, MD, Hicks India said, “We expect government to re-look at GST rates on medical devices since currently it is pegged at 12 percent which could affect the overall cost structure of the healthcare sector and even a minor relief may result in delivery of affordable healthcare services to the wider population. Also, some basic products like thermometers and hot water bottles should be moved to tax slab of 5 from 18 percent.”

“We expect the Union Budget 2018-19 will have provisions of bringing relief to the international level Condom manufacturers like us, so that the consumers can be benefitted by affordable pricing of our most impressive product portfolio developed through extensive research into their preferences and needs,” said Anupam Ghosh, Director, Anondita Healthcare Limited.

With the ambitious Make In India movement gaining momentum, India is well poised to become a leading manufacturing hub and exporter to the entire world.

Haji Kamruddin, Managing Director, Servokon Systems Limited said, “We are expecting a booster dose of reform-oriented policies in this year’s budget. We also expect the government to stress more on improving the ease of doing business which will further help build investor confidence in the manufacturing sector.”

“As the industry is currently struggling to cope with the reduced consumer demand, we also expect favourable change in the Income Tax slabs and rates leading to more disposable income in the hands of the consumers to spur consumption,” said Sunil Jain, Director, Baltra Home Products.

Echoing similar sentiments, Rakesh Zutshi, President, Electric Lamp and Component Manufacturers’ Association of India (ELCOMA) and Managing Director, Halonix Technologies Pvt. Ltd. said, “We expect the government to support the growth of LED manufacturing in India by providing major tax incentives, besides announcing a couple of favourable policies in the upcoming Union Budget 2018-19.”

“In order to fulfil the vision of Make in India, such encouraging measures are urgently required. At ELCOMA, we have successfully travelled a long way fulfilling our mission to promote and develop co-operation among the manufactures of electric lamps and components with simultaneously endeavoring to transform India into a global manufacturing hub of superior, but economical LED products.” he concluded.

Budget 2018: India Inc wants GST reforms, friendly-business policies