Indian business community in warm embrace of Modi’s budget

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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