The past financial year has seen a decline in the Nifty and Sensex, despite the incumbent Government’s focus on ease of doing business and push to the manufacturing sector. The country has even risen up four spots on the Ease of Doing Business rankings to 130, and there have been multiple MoUs signed with many foreign institutions and governments pledging new partnerships and investments for infrastructural development.
Despite all of this, there is still a lingering hesitation for many foreign institutional investors (FIIs) to keeping investing, and stay invested in the country. With the Budget around the corner, there are speculations abound with respect to the stimulus and impact it will have for businesses and the common man alike. It may hold the key to ensuring focused development on key sectors and enhancing growth, while providing businesses incentives to keep investing on a regular basis to the country.
Real estate
The real estate sector has seen a steady decrease in demand over the past few years, and is in need of an impetus to increase interest among buyers. This sector needs to be given a push in the form of concessional loans for developers and construction companies, and provide consumers tax benefits on home loans as they begin to pay interest on the loan. Relaxation in home loan rates would also mean an increase in demand by consumers, especially for first-time home owners.
Banking
The banking sector is facing pressure as a result of the rising number of non-performing assets, which is becoming a cause of concern as it mounts pressure on the banks to not be as free to provide loans to consumers and chances of delay in passing rate cuts to the consumer. Placing structures in order to ensure regular collection of such debts, and improving the health of banks, would not only create a more conducive environment for large consumer spending, but also for growth of investments.
Corporate tax
The announced phased reduction of corporate tax rate from 30 per cent to 25 per cent, including withdrawal of exemptions getting initiated this year, would usher in further investments and create more employment, in addition to more revenue collection for the Government. This move indicates an increase in the ease of auditing, increases transparency in the process and improves the country’s positioning in the international market.
Make in India
Make in India needs to be taken forward by getting regulatory reforms like the GST implemented, as it would forward benefits across various verticals. It would bring direct benefits to companies, and also provide large incentives to the Government in terms of collection of larger tax revenue. Additionally, it would also increase the interest of foreign investors looking to invest in new sectors, and would cut down on a lot of regulatory red tape. The benefits of these savings to businesses can trickle down to consumers, leading to more demand and increase in governmental income.
The Budget should signal new opportunities, improve the country’s image for international investors, and invite further opportunities for growth by focusing on reforms, easing regulations and creating an environment for increased consumer spending.