Created: Thursday, 10 July 2014 13:10
Narendra Modi headed new government announced its first union budget on Thursday twisting and turning the markets until ending Nifty flat.
In order to promote capitalization in the market, government has worked on a bunch of measures. The major change bringing policies cover tax benefits, eased norms of regulations for foreign investors, much talked about corporate bonds besides creating a new instrument Bharat Depository Receipts (BDR), helping BSE benchmark Sensex to climb up 434 points.
Real Estate and Investment Trust (REIT) charmed up the market as Finance Minister Arun Jaitely announced special incentives for it. Financial sector reforms introduced a uniform system of Know Your Customer (KYC) service allowing inter-exchange of data records. Simple understanding of using a single demat account to access and work in all the transactions.
The union budget 2014 is aiming to increase the freedom in the markets allowing foreign investors and presenting BDR similar to ADR and GDR. In order to promote international trades, FM changed the terms and conditions of Indian Depositor Receipt (IDR) scheme easing its use. Additional, he proposed Indian debt securities international settlements in his plan.
FM said that he is willing to provide necessary incentives for REITS when asked about his plans in real estate market. “In innovation, a modified REITS type structure for infrastructure projects is also being announced as Infrastructure Investment Trusts (InvITs), which would have a similar tax efficient pass through status, for PPP and other infrastructure projects,” Jaitley said.
Jaitely said that he is going to allow the liberalization facility of five percent withholding tax to all bonds issued by Indian corporate abroad, revising the validity date of the scheme to June 30, 2017. (At present, the tax rate varies across bonds and could be higher as well).
Banking system is receiving relaxation from the free-floating structures geared to enter the market. Fresh equity issues will be successful with eased norms for international investors. Major contribution is coming from NRIs who have been willing to participate in the market. Such instruments are designing for attract long-term investments in India.
Financial sector regulators should take early steps for a vibrant, deep and liquid corporate bond market, and necessary steps for currency derivatives market by eliminating unnecessary restrictions, according to Jaitley.
Financial Sector Legislative Reforms Commission (FSLRC) recommendations are processing under the leadership of new FM Jaitley and the process of consultancy with all the stakeholder will complete soon. He said, "the suggestions of the FSLRC are a necessity for better governance and accountability".
Jaitley addressed the tax concerns of Foreign Portfolio Investors (FPIs) stating that the income arising to this class of investors from transaction in securities is classifying under capital gains.
Created: Tuesday, 08 July 2014 13:04
Apex industry body ASSOCHAM on Tuesday called the Rail Budget presented by Narendra Modi government very businesslike and smart.
It said the Rail Budget focuses on "delivery not populism."
"Clearly spelling out the economic model of the Narendra Modi government, the Railway Budget is banking heavily on involvement of the private investment- both domestic and overseas on modernization and a smart functioning of the country's largest transport operator," ASSOCHAM President Rana Kapoor said.
"The emphasis is clearly on improving efficiencies, passenger amenities with promise to take them to global standards and the much-needed safety of passengers," he said.
"The Railway Budget opens up vast opportunities for the public-private-partnership in a whole gamut of areas including cleanliness, upkeep of major stations like the airports, IT infrastructure. The smart strategy lies in trying to get the new businesses out of the sheer necessities and ordinary looking but important services such as catering."
"Besides, a clear strategy has been spelt out to retrieve the Railways' share in the freight movement. Though the freight movement gives over two-third revenue to the organisation, it had been neglected in the past. IT-driven parcel management and special trains for parcel movement for capitalizing on the growing e-commerce business is an intelligent move," he said.
"We are sure, that unlike in the past, the PPP models will attract a lot of private and overseas investment as the new government enjoys a great amount of credibility to deliver. For the first time perhaps, the Railways Minister's Budget speech read like speech of a Rs. 1,47,000 crore corporate which is wanting to go about servicing its customers," Kapoor said.
Rohit Gadia, Founder and CEO, CapitalVia Global Research Limited said the budget announced sounded more realistic.
He said industries like Kalindee and Titagarh wagons appear strong as the budget announced is having plans for new trains , railway infrastructure development and completion of ongoing projects. This will directly benefit these stocks.
Promising course correction and pledging to move away from populism, Railway Minister Sadananda Gowda on Tuesday presented the Narendra Modi government's maiden Railway Budget focussing on a public-private partnership in infrastructure development, infusion of FDI, announcing introduction of a diamond quadrilateral of high speed trains, an inaugural bullet train service besides harping on e-ticketing augmentation, safety of passengers and cleanliness.
While the Lok Sabha was adjourned after budget speech of Sadananda Gowda amid din by disgruntled MPs of Opposition from largely TMC, Gowda promised on infrastructure and modernization besides taking forward wi-fi system.
"I have an open mind to correct," said Gowda, who emphasised on logistic parks and private freight terminals on PPP model.