The first budget by the Narendra Modi-led NDA government lays down the broad policy framework for the route it wishes to take over the next nine months for economic development and progress.
Exemptions provided by the government to taxpayers by raising the exemption limit and investment limit under Section 80C brings in the feel-good factor, while other initiatives attempt to support and sustain growth over the next few years along with macroeconomic stabilisation.
India has been the victim of inflation and stagnation of economic growth over the last couple of years. The challenge for the government was to create a road map for growth without further fuelling inflation. This balancing act has been attempted with a certain degree of success in the budget.
The government has committed to contain fiscal deficit at 4.1 per cent and this augurs well for fiscal discipline and inflation control. Incentives provided in the budget to different sectors have been calibrated in a manner to create minimum fiscal strain.
As a sector, we believe that the biggest benefit of this budget goes to real estate, power and infrastructure. Providing complete tax pass through for the Real Estate Investment Trusts (REITs), lowering the requirements of built up area and capital conditions for FDIs combined with increasing available deduction to individuals on account of interest on loan for self occupied property augurs well for the real estate sector. This sector was out of favour for a long time and with these incentives, buoyancy should be back.
Investment in real estate companies with credible management and promoter track record for medium and long term, looks attractive post today’s budget. Power is another sector, which has received considerable support. Ten-year tax holiday extended to undertakings which begins generation, distribution and transmission of power by March 31, 2017, makes new projects attractive.