Industry leaders largely reacted positively to Narendra Modi’s first full year budget, as India’s government tried to carefully balance the desperate need to boost the country’s economy while keeping its finances in check.

But some were disappointed that there was not more of a focus on non-resident Indians (NRIs).

Expectations had soared ahead of the budget, described by some as “a make or break” budget for Mr Modi’s government, as everyone looked to it to deliver the economic growth and business friendly policies promised during its electoral campaign last May.

A 700-billion rupee (Dh41.7bn) increase in infrastructure spending and lower corporate taxes were among the headline announcements in the budget for the financial year which begins in April 1. A long-awaited national goods and service tax is to be introduced by April 2016.

“There is a clear and sharp focus on the four key areas of growth, inclusion, fiscal prudence and tax rationalisation,” said Chanda Kochhar, the chief executive of ICICI Bank. “The budget promotes growth through its focus on infrastructure and ease of doing business.”

Stuart Milne, the group general manager and chief executive of HSBC India, said that it was “a sound performance … to conquer the expectations” delivered by the finance minister Arun Jaitley.

“A mix of big, long-term reforms and some sharp short-term measures, it is just the perfect budget that the Indian economy needed to achieve sustainable growth,” Mr Milne said.

But for expatriates, there appeared to be little to cheer in the budget.

“The budget seem to have missed out on the Modi government’s posture of integrating overseas Indians into the country’s growth story as there is no specific scheme that could benefit NRIs who remit billions to India, or any policy indication that will encourage NRIs to invest in India projects,” said Y Sudhir Kumar Shetty, the president of UAE Exchange.

He added that the budget would, however, pave the way for economic growth in India.

BR Shetty, the chairman of UAE Exchange and the chief executive of NMC Healthcare in Abu Dhabi, said that initiatives highlighted by the government to deal with black money were positive signs.

“If stringent regulations are followed in this front, legal remittances would increase India’s foreign assets and broad money, signalling economic growth.”

Stock markets in India, normally closed on Saturday, opened yesterday for a special trading session for the budget. The benchmark BSE Sensex gained 0.4 per cent to 29,361.50 points.

“The budget may lack big-ticket announcements but it has touched upon all the key issues that are important for both economic and social development,” said Ankur Bisen, a senior vice president at Technopak, a consultancy in India. “The impact of this budget will be felt in five years.”

The budget was presented against an improving economic environment, including easing inflation levels and rebounding GDP growth.

India’s finance ministry on Friday issued a forecast that the country’s GDP could grow by between 8.1 per cent and 8.5 per cent in the next financial year, under a recently revised methodology for the government’s GDP estimates, which has pushed figures higher compared with previous forecasts. This is up from a predicted 7.4 per cent in the current financial year.

“Aiming for a double-digit rate seems feasible very soon,” said Mr Jaitley.

Nilesh Ashar, a tax partner at KPMG in Dubai, said: “The super-rich NRIs will cough up more taxes with an enhanced surcharge of 2 per cent on income of more than 10 million rupees [in India]. Overall, the budget has provided a positive economic outlook, with a focus on growth, job creation, more tax benefits to middle class tax payers, unearthing black money and providing a direct tax regime that is internationally competitive.”

Sudhesh Giriyan, the chief operating officer of the remittances company Xpress Money, said that new education measures announced to improve the skills and employability of Indians could create more opportunities to secure better jobs in countries such as the UAE.

“When skills are suitably polished, the workforce is ready for better opportunities in employment across all sectors, not only in India but also globally,” he said.

A better-skilled workforce abroad would mean increased remittances back to India, he said.

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Srikanth Meenakshi, co-founder and chief operating officer of the online investment platform, shares some tips for Indian expatriates.

What are non-resident Indians mainly investing in?

Most, especially those based in the UAE and the rest of the Arabian Gulf region, mainly remit money into India for the funds to stay invested here. Their intention is to use the money for their need in India, whenever it arises, or for their family in India. Bank non-resident rupee deposits and property are the most common forms of investing for this segment. What NRIs miss out on are the superior market-linked returns that more contemporary products with high liquidity such as equities and mutual funds can provide.

What advice would you offer to NRIs thinking about investing in India?

India offers a tremendous investment opportunity, and the chance to participate in this growth is something that every NRI should take advantage of. Globally, India is primed to be one of the fastest-growing economies over the next decade. Mutual funds in India offer superior returns and great tax advantages.

Are the weak rupee and stronger dollar good news or bad news for Indian expats’ investment portfolios?

This would depend on whether the NRI intends to retain the money in India or repatriate it. It is more important for an investor to look for investment options that deliver well and provide diversification, tax efficiency, liquidity and ease of transacting. If the intention of the NRI is to repatriate the money, then other factors such as tax treatment in the two countries, besides the currency movement (a depreciating rupee at the time of investment and appreciating rupee at the time of repatriating are beneficial) have to be considered.

The strengthening of the US dollar against the Indian rupee in recent years has allowed many UAE-based Indian expatriates to reap the benefits of a strong dirhamw exchange rate when sending money to their home country.

But not all non-resident Indians (NRIs) are celebrating the greenback’s rise, which has caused the rupee to fall from 58.5 to the dollar last May to above 62.

Glenn Selwyn, the managing director of Ambit Advertising, an agency in Dubai, says the rupee’s weakness has weighed on his investment portfolio in India.

He explains that high inflation in India has eroded any gains from the exchange rate, while the rise of the dollar means that investments and savings made before the rupee’s decline are worth less.

“I have a lot of NRI deposits, so in real terms that value goes down. I also have a lot of property investments, so in real terms that also goes down,” says Mr Selwyn, who is from Mumbai and has lived in Dubai for 18 years.

“A weaker rupee is OK for short-term gains for people who have a fixed amount to send every month such as labourers and low-income groups. For them, seeing that value going up is probably a good sign. But definitely not for me, because I’ve got too much going on in India.”

When Mr Selwyn invested heavily in stock markets in India in 2011, for example, the exchange rate was about 45 rupees to the dollar.

A weaker currency fuels inflation because it pushes up import costs. Inflation between January 2012 and 2015 has averaged about 9 per cent annually.

Mr Selwyn says he is now hanging back from new investments in India, having focused on buying property there over the past three years – the instalments for which he is still paying off.

Srikanth Meenakshi, the co-founder and chief operating officer of, an online investment platform, says that post-economic downturn inflows into India under various NRI deposit plans jumped 13-fold from US$2.9 billion in the financial year between 2009 and 2010 to $38.4bn in the financial year of 2013-14.

“Most NRIs wanted to send home more money when the rupee was depreciating against major currencies – the rupee depreciated 33 per cent in absolute terms against the dollar between March 2010 and March 2014,” he says. But many NRIs have not necessarily boosted their wealth as a result, Mr Meenakshi points out.

“While they would have got more rupees for every foreign currency remitted, what NRIs may have missed out by merely focusing on NRI deposits is that the local interest rate, post-inflation, remained low to negative over the above period. The consumer price inflation index increased 40 per cent in absolute terms over the same period.”

Ajit Khasnis, the director of Wealth Managers in Pune, describes the strength of the dollar against the rupee as “a double-edged sword”.

“I feel the weak currency may give an opportunity to earn additional returns on currency movement,” he says. “This will be true provided the Indian rupee appreciates during the tenure of the investments. The India growth story will give the opportunity of currency appreciation over a longer tenure.” But he adds that “this hypothesis may not hold true if we face higher inflation in India”.

Girish Iyer, a relationship manager at Invest Bank, comes from Trivandrum in Kerala and has lived in Dubai for the past two decades. He has divided his investments in India between property, fixed deposits, and equities, but believes that a stronger dollar has not been to his benefit.

“At the end of the day, it’s one and the same thing,” he says. “Maybe I can enhance my investments in India at this point of time – but what about the inflation in India? It’s going to nullify whatever enhancement we get in the exchange rate.”

This year, he says he plans to split his investments in India equally between property and stock markets, as he aims to secure better returns.

“I want the Indian rupee to get stronger,” Mr Iyer says. “I want my country to grow in leaps and bounds.”

A number of NRIs have also borrowed money in the UAE at low interest rates to invest in the rupee and India.

Over the past few years, Indian property has been another popular option for expatriates because of prices rallying and the rupee-to-dollar exchange rate.

Raghvendra Nath, the managing director and chief executive of Ladderup Wealth Management, however, recommends NRIs to invest in stocks instead to secure higher returns.

“We are now standing at an inflexion point,” he says. “Smart investors should book profits in real estate and invest the profits in Indian equities.

“The real estate rally is almost done with. Here onwards at best you can expect low single-digit returns in the next five years. In contrast, the equity markets are just warming up. If the economic recovery is strong, its benefits would directly reflect in the stock prices. It wouldn’t be an exaggeration to say that investors can expect similar returns in equities in the next five years.”

Mr Khasnis agrees that equities and equity-linked products are the best long-term investments for NRIs.

But for those who believe the rupee will fall even further, Mr Nath warns that this is unlikely.

“While there has been significant depreciation of the rupee versus the dollar, we shouldn’t witness a runaway depreciation in next few years,” says Mr Nath. “This is because not only are the macro parameters such as inflation and current account deficit becoming favourable, but we also expect foreign portfolio investments to grow significantly.”

While many NRIs are hoping the dollar strengthens further to help their dirhams fetch more rupees when they send lump sums home, Mr Selwyn wants the opposite to raise the security and value of his wealth in India.

“I would always like – and I hope [India’s prime minister Narendra] Modi helps there – to get the rupee to around the 53 to 55 level,” he adds.

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MUMBAI // Expectations are riding high for Narendra Modi’s first full-year budget on Saturday as investors and companies hope that India’s government will deliver a wave of measures to make it easier to do business in the country and boost economic growth.

Plans for a new uniform goods and service tax, a rethink of India’s costly food and fuel subsidy schemes, incentives for the manufacturing sector and steps to improve infrastructure are among the main announcements that business leaders will be looking for.

This is Mr Modi’s second budget since he came to power last May in a landslide victory won on the promise of boosting India’s economy and his business-friendly attitude. The first one was delivered just weeks after he came into office but was widely considered to be underwhelming, adding to the pressure for Saturday’s announcement not to disappoint.

“Expectations are sky high,” says Pranjul Bhandari, the chief India economist at HSBC. “Markets are expecting the government to stick to the ambitious fiscal consolidation path it has inherited, and yet revive economic growth.”

Improving GDP numbers, soaring stock markets and lower oil prices are all factors that are working in the government’s favour. The IMF has predicted that India’s economic growth will outpace China’s in 2016, and has forecast growth of 6.3 per cent for India this year, up from 5.8 per cent in 2014.

“The budget could be more relevant for the market than usual,” said Dhananjay Sinha, the head of institutional research at Emkay Global Financial Services, based in Mumbai. “There is little scope for the budget to disappoint.”

Arun Jaitley, India’s finance minister, will present the budget.

“We expect the main theme of this budget to be higher outlays on public investments, particularly railways and also roads, financed by ploughing back much of the savings from oil,” said Ms Bhandari. “Revising the goods and services tax road map with realistic deadlines and putting states at the heart of improving business and growth environment are other themes we expect to see.”

Hariprakash Pandey, vice president, finance and investor relations at HDIL, a property developer based in Mumbai, said that he would be looking out for plans to boost the affordable housing sector in the budget.

“We expect that this budget will be growth-orientated, one that would fuel in investments and would facilitate ease of doing business in India through reform measures and stable taxation policies,” he said.

Stock markets in India are normally closed on Saturdays but will open this Saturday for the budget. Stocks are expected to fall sharply if the budget fails to meet expectations, which might also prompt the Indian rupee to weaken.

The benchmark Bombay Stock Exchange index closed flat yesterday, with the Sensex closing at 29,007.99 points. The index is up 5.5 per cent from the start of the year. The rupee, meanwhile, strengthened nearly 0.5 per cent yesterday to 62.02 per dollar in late afternoon Mumbai trading.

The Federation of Indian Chambers of Commerce and Industry, which conducted a survey of 150 companies, said that the respondents were “cautiously optimistic” and “pinning their hopes on the direction of reforms” from the budget.

“They expect the government to continue pursuing the broad economic agenda and take tangible steps towards its completion,” the federation said. “It was unanimously felt that the government should step up action on ease of doing business, and especially towards simplification of taxes in the forthcoming budget.”

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