Yesterday, on 10th of July
11, 2014 union finance minister Mr. Arun Jaitley presented the maiden General Budget
of the new BJP(NDA) Govt. for the year 2014-2015. Entire nation, including
General Public, Business Establishments, and Market as well, was waiting for
this budget. Every year people wait for the Budget as if it is going to make a
dramatic change in their life overnight. This is mainly due to hype created by
the media. People are mostly interested in what is going to be dearer, what is
going to be cheaper and what change has been made in the Tax slabs. In the
nut-shell it can be said that general people are concerned only with the
matters which are of their regular interest. But the Budget is a financial plan
of the Union Govt. for a year. It means, the Govt. makes plan of its sources of
Income and places of expenditure for the next one year. With the planning of
expenditure it provides a road map for future developmental activities that are
about to take place.
Now let’s come to the yesterday’s
Budget and its announcements. The different political parties analyzed it
according to their convenience. Govt. supporters praised it and opposition
criticized it. Which is quite natural and we have, as a professional, nothing
to do with that. According to me, as a Finance and Capital market professional,
Union Finance Minister Mr. Jaitley has made some little but very important
announcements that will have a long term impact on investment scenario. Some of
the decisions are :
The
Govt. has made provision to have single Demat Account and KYC for all type of
securities related investment. This will make investment a convenient and
hassle free activity. Like Mutual Fund, there will be REIT Fund. It will provide small investors an opportunity to invest
in Real Estate Sector that was the sector. This will also encourage the
investors to invest their money in different diversified places like Mutual
Funds, Direct Equity, etc. Apart from that, bringing back KVP (KISAN VIKASH
PATRA) is also a good decision. It will attract the investors towards Post
Offices and will benefit the agents as well who were having tough days in recent
times.
The
BJP(NDA) Govt. has given its biggest focus on Construction. Rs. 150000 Crore
has been allocated just on construction. Rs 7060 crore has been allocated for
the development of 100 smart cities. Rs. 37880 crore has been given for Road
construction. The repayment period for the infrastructure finance has been
increased from 10 years to 25 years. The decision of developing 100 smart
cities around major cities is going to have a huge impact on the economy. I
think the Realty and Infrastructure sector is once again about to enter into a
Boom phase. We have seen that Realty sector has been facing recession for the
last few years. This was mainly due to difference between demand and supply. The
below given chart will make it clear. Now it is ready to take off. So the
“ACHHE DIN” of this sector is about to come. So stock of Stocks of good realty sector companies can be added in the
portfolio for a long term point of view. It will give handsome return. Both
Fundamental and Technical Analyses are suggesting this.
With the Realty sector, there are
many ancillary industries are associated. Like Cement, Steel, Transport, etc.
These industries will also see smart growth with realty sector. Apart from
that, other sectors like telecom, road, healthcare, etc will also get boost.
Jobs will be flooded in infrastructure and construction sector in the coming
years. I think only construction and infrastructure sector will provide about
75 to 80 lakh jobs in the coming 5 years.
The
Finance Minister has also announced some incentives like tax holidays for power
and energy sector. This is another sector that is needed major attention. We
need that India is a growing economy and without energy, no developmental
activity can take place. So apart from tax incentives, smooth supply of fuel
should be ensured. FDI in Insurance and Defence has been increased from 26 to
49 percent. I think this is a good and much awaited decision. We are well aware
that our defence forces are facing acute shortage of equipment and technology.
With the FDI, new technology will come to the defence establishments and job
opportunities will be created as well.
Now
let’s come to the Banking and Financial sector. We know that Banking and
Financial sector is the Engine of all the sectors. It provides one of the 4Ms
(MAN, MACHINE, MATERIAL &MONEY) that are essential for any business
activity. If any sector gets sick, one sector that gets worst affected is
Banking and Financial Sector because entire burden comes on that and its
profitability erodes. In the recent days Banking sector has been worst affected
by the poor performance of Realty and power sector. Now when we are seeing a
turnaround in these sectors, we can hope turnaround in the banking sector as
well. That’s why we have notices huge jump in some infrastructure financing
companies like IDFC. Some decisions
have been taken like two bank accounts for every citizen with Public Sector
Banks will also increase the penetration of banks and achieve proper financial
inclusion goal and increase of employment as well. The PSU banks will get 2.40
lakh crore to finance the business entities.
I think these are some steps that
will show their impacts on the economy in future in positive way. In this
Budget, minor relief has been given in taxes and major focus is made on
economy. As far as market is concerned,
it is in the pressure of profit booking due to non fulfillment of expectation
at the taxation front. But in the longer term, it will be positive.
:-NEERAJ DINMANI
CHAIRMAN & MANAGING DIRECTOR,
EDMAX TECHNOLOGY PVT. LTD. &
EDMAX INVESTMENT SOLUTIONS
Email id- dneeraj@edmax.in, cmd@edmax.in
Website- www.edmax.in
Mob.- +91-9308944066, +91-9431458941
