A FAIR OVERVIEW OF UNION BUDGET 2014-15

Yesterday, on 10^th 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  

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