Head- Private Client Group Research, Kotak Securities
The FM has, expectedly, used the budget to lay down the road map for the economy over the next few years. Various initiatives have been announced towards this goal. Plan expenditure is budgeted to grow by 20% YoY. Infrastructure and manufacturing, which can create several jobs, have received significant attention. FDI limits have been enhanced in Insurance and Defence. Various initiatives have been announced to increase ease of doing business and remove uncertainties on the taxation front. This will attract more private sector funds. The budget has rightly attacked the supply side constraints with a view to control inflation. On the taxation front, Individual taxpayers will benefit with the increase of Rs.50000 each in basic exemption limit, deduction under section 80C and deduction on interest for self-occupied house property. All in all, we think this a pro-growth and responsible budget, which is positive for the economy and markets in the medium-to-long term.
Chief Economist, ZyFin Research
Despite being finance minister for just two months, Mr. Jaitley has made a commendable effort to chalk out a sustainable roadmap for restoring the economy. ZyFin's data analytics has detected that economic variables such as Central Government Revenue Receipts, gross earnings from foreign tourists, domestic air passengers, availability of electricity and foreign exchange reserves to have a significant impact in shaping the direction of the Indian business cycle. Today's budget incidentally addressed long-term development plans impacting all of these: suggested tax reforms would improve Central Government Revenue Receipts; major impetus on tourism ranging from e-visas to developing heritage sites would augment gross receipts from tourists; the Jyoti Gram Yojana, impetus on green energy projects and tax holiday to power undertakings until March 2017 would go a long way towards ensuring 24/7 electricity; opening up FDI in key sectors coupled with a revival in growth and stable government would continue to attract foreign investments in the financial and real sectors, adding to foreign exchange reserves. The major thrust on sectors like infrastructure, agriculture, construction and steps to enhance domestic savings would lead to a major turnaround in the manufacturing sector and the associated job market. We are, therefore, optimistic that these reforms would provide the long-awaited fillip to high-growth.
CIO, Future Generali India Life Insurance
The maiden budget of our new Finance Minister clearly addressed three vital aspects of economy: adhering to Fiscal Discipline, boosting Investment climate and reviving Growth.
Despite the challenging macro environment, the FM has kept the Fiscal Deficit within 4.1% for FY 2014-15 as envisaged in interim budget in February 2014.
He has raised personal income tax exemption level from Rs 2 lakhs to Rs 2.5 lakhs, hiked interest rate deduction limit on home loans from Rs 1.5 lakhs to Rs 2 lakhs and increased investment limit under Sec 80 C from Rs 1 lakhs to Rs 1.5 lakhs. This will help in channelising household savings for industry, infrastructure and housing. Also hike in FDI limit in Insurance and Defence sector from 26% to 49% would bring in much needed long-term capital to respective industry.
Incentives for REIT, benefits for long term infrastructure loans and allocation of Rs 37,000 crores towards road projects etc are measures to revive real estate and kick-start infrastructure projects.
MD & CEO, AEGON Religare Life Insurance
Allowing FDI in insurance to go up to 49% is a welcome measure. This should help the insurance industry as a whole in terms of augmenting the capital inflows and also better practices from the foreign players.
CEO & MD, Aviva Life Insurance
The Finance Minister in his budget has recognized the contribution that a growing insurance sector can make to the economy, particularly for long-term investments in infrastructure. He has alluded to a multi pronged approach for encouraging insurance sector, rightly pointing out "Benefits of insurance in India have not reached a large section of the people and insurance penetration and density are very low. The Government would work towards addressing this situation in multi-pronged manner with the support of all stake holders concerned."
We welcome the announcement of proposed increase in FDI cap in the Insurance sector from 26% to 49%. The inclusion of this aspect among the initial opening paras of FM speech indicates the strong intent of the government to pass the Insurance amendment bill, which is welcome. This single announcement has potential to be a game changer as it can bring foreign exchange inflow of $10 ??? 15 billion as per Life Council estimates. The industry can now set its eyes on stepping up product offerings, distribution networks & technology to ensure superior customer experience. Higher amount of capital will provide the scope to the insurance companies to tap under-insured markets through better infrastructure and deeper distribution strategies. Other positive announcements like increasing the basic income exemption limit and housing loan deduction by 50,000 each will leave more money in the hands of investor. 80 C investment cap increment to 1.5 Lakh expands room for insurance products further. These are positive developments for the economy and insurance industry"
Dr GVK Reddy
Founder Chairman & Managing Director, GVK Power and Infrastructure Limited
The Budget 2014-15's specific thrust on the infrastructure sector is a welcome move. The assurance to ensure adequate supply of coal for thermal projects, the tax holiday for the power sector, allocation of over Rs 37,000 crore for roads and focus on developing airports under PPP for Tier I and II cities; all indicate the government's recognition of the fact that a strong foundation of infrastructure can only help realise a country's economic growth.
CEO at Kotak Mutual Fund
The increase in the 80C limit enhances tax incentive for potential retail investors to invest into equities mutual fund. The increase in the long-term capital gains tax (LTCG) rate from 10 to 20% and the tenure from 1 to 3 years (for the debt mutual funds) leads to the closure of tax arbitrage. This directs the energies of the mutual fund industry from short to long term; and towards more stable investible inflows. The arbitrage available while calculating the dividend distribution tax has also been removed. Overall, I believe the finance minister is trying to prepare the investor for a long-term and more objective approach towards the mutual funds: which is more investments and less tax arbitrage.
Chief Actuary at Kotak Mahindra Old Mutual Life Insurance
The budget made certain announcement relating to the insurance Industry. Here are few comments:
1. FDI increased from 26% to 49%
Increasing FDI from 26% to 49% will lead to significant amount of foreign investments into insurance sector in India.
We expect about 100 life and non-life insurance companies to serve market of our size. Increasing FDI would lead 25-30 new insurers entering the market.
This will not only lead to increased availability of insurance to Indians but will generate lot of employment opportunities for Indians.
The Life Insurance penetration is low FY 12 (at 3.96) and this change in FDI to 49% is likely to supply the much-needed capital to grow insurance business in India and help boost the Insurance penetration.
FDI increase is much-awaited good move by the government, which will help provide significant long-term investments to meet the needs of infrastructure projects of the Government.
2. Insurance Bill Amendment
The insurance regulations are very old and had been made keeping in mind the de-nationalisation of insurance industry (and therefore LIC.) Passage of the insurance bill amendment will bring more clarity and simplification to the regulations in line with the current regime.
3. KYC Norms
Announcement to allow use the KYC of other financial institution will optimise the process and better implementation. A very positive move which help not only insurance but all other financial services sectors like Mutual Funds, banking etc.
Removing the service tax for micro-insurance shall provide relief to the poor class of the society in getting insurance at lower price without much burden on exchequer.
5. FSLRC/ Modernise the regulatory process
Is a forward-looking move to bring consistency in regulations and is likely to bring more efficiency and consistency across the regulators.
May surely help to assess and manage any systemic risks in the financial services sector in the country.
However, not everyone was happy with Mr Jaitley's budget. Here's a scathing reaction from the healthcare sector.