Sunday 14 July 2019

CA Shailesh Haribhakti on Indian Budget

Rotary Club of Bombay West kick started it's first regular weekly meeting on 10th July, 2019 with Rtn. CA Shailesh Haribhakti his talk on "India on the Path to a 5 Trillion Economy?" and his emphatic response was It Certainly Will.


Rattling off facts & figures, he enthralled the spell bound diverse audience comprising of Rotarians, Rotaractors & Bombay Industries Association members with his insight and views of the economy and the final 2019 budget presented by economist fin min mrs Nirmala Sitharaman.

India is currently poised with 190 lakh cr GDP, which is roughly just short of 3 Trillion $ (211 Lakh Cr), with a GDP growth rate of 6.8%.

to reach 5 Trillion $, the GDP growth Rate has to be 8%, which seems possible
due to the following factors

  • stable government with a clear mandate.
  • USD fluctuations: from 64/- 3 rs ago to 72 and then 68. there have been large swings
  • dramatic changes on the macro front
  • fiscal deficit is contained at 3.4 % and further it is brought down to 3.3 %, this signals to the world that inflation is contained & on a downward trend, improves India's sovereign rating, raising possibility of Gov borrowing from  international financial markets at very low interest rates from countries like france, where the interest rates are -ve, and Japan
 
Large corporates will not need have to negotiate with bankers! When they can raise funds from international bond markets. L&t needed Rs.500 crores, it was offered 3500 Cr! And is currently in process of borrowing 550 Million USD.  Startups /sme/microfinance firms have extra ordinary access to easy credit.  Big Boys of the indian industry have access to international markets. Currency markets foward cover is lower than inflation. Coupon rates are lower than domestic markets. Compared to china debt to gdp ratio of 3, India's debt to GDP is <1, so there is considerable headroom to borrow from International Markets.

Explaining the concept of 'innovating to 0', Mr Haribhakti mentioned the positives of last 5 years.

  • 100 % electrification of villages
  •  Swachh Bharat mission 
  • India will be open Defecation free resulting in reduced illness resulting in better hygiene & health of citizens, saving precious resources. 
  • Har ghar mei Nal se Jal: likely to save 30 cr Rural women x 2 hrs daily which which will lead to immense savings and reallocation of resources. The investment envisaged for this is several 100 cr every year. 
  • Highway / Roads construction rates have doubled. 
  • Chandrayaan-2 mission is on the verge of being launched whose objective is to also to explore/map the availability of helium, an antidote to pollution, supposed to be in abundance.   
  • 100 million us$ new funding needs to be found.


Budget has also given boost to Electric Vehicles. With a exemption of 1.5 lakh interest on loan for EV pruchase. Also GST on EV is reduced to 12%. A number of Indian and German Auto cos are in process of launching introducing EV in Indian Market which has the numbers for sustained growth. L&T is putting up a 10000 cr solar wind park in 3 yrs time. India is targetting 40% energy from renewables, which will drasticlly change the balance of payments, this has given rise to complete fresh thinking. First time in history of india UID + Family Bank Account + DP access & Device to transact are all available and implemented.  
Housing for All is real: Mahindra Life Spaces has 70% booking on launch of affordable housing!

The whole mindset of people has changed for the better to a performance oriented one as a result about 50% of builders who operate in the same fashion as earlier are on the verge of closing.

GST: One nation One Tax though not without the initial hickups is now in its third year..

Demonetisation: Incredible 50 million tax payers increasing to 100 million, though 60 million will be below taxable limit. 

New initiatives such as faceless tax assessment, requiring no visit to the IT officer has eliminated corruption.

New Eligibility criteria for Persons for filing Tax return have been introduced such as foreign travel spending above 2 lac on foreign trip or withdrawal of 1 cr cash from Bank will entail filing Tax return. 

Determined Tax demand on a capital  gain is going to be a reality in the near future due to compulsory Aadhar / Pan in transactions & better data mining at the ITO back end.

Loan / Credit processing for MSME will take 59 minutes. Startups have been given a big boost, Angel investor premium valuation norms have been eased. Capital gain on sale of Residence if invested in startup is expempt upto 2021. 

To reach 5 Trillion GDP, where will the investment com from ? 105 Lakh cr is expected from PSU disinvestment. Increase in minimum Public share holding to 35 % in listed cos. Next 2 Trillion will come not from the 35 % urban population of India but from the 65 % Rural people of Bharat who are experiencing money in their own Jandhan accounts.

Pension for all & Pension for traders is also announced.  14 % salary of government employees goes in Pension/EPF accounts. The number of registered persons on EPF has gone up by 10 times. 60% withdrawal qualifying for tax exemption.

Mobility for all, country wide common card for use on all public transport.
10000 farmer producer organisations to be launched. Every woman can avail 1 Lakh loan for investing in equity in self help groups.  Social stock exchange: every social organisation's accounts will be audited and information shared / listed.  Banks to be monitored by a RBI appointed regulatory authoriy, though co-operative and regional banks have been left out currently, there is going to be significant drop in NPA 
 
This is a budget of continuity, infrastructure growth, excitement & clearly shows the path way to a 5 Trillion $ economy.

- Report by Rtn.Manish Mehta, Hon.Editor, Flying Carpet (club bulletin)

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