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Budget 2016: Well balanced and forward looking

The finance minister has done a fabulous job covering all the critical areas, be it rural economy, agriculture, infrastructure, ease of doing business, tax reforms, etc.

Renu Sud Karnad        Last Updated: February 29, 2016  | 00:00 IST
Renu Sud Karnad, Managing Director, HDFC
Renu Sud Karnad, Managing Director, HDFC

The finance minister has done a fabulous job covering all the critical areas, be it rural economy, agriculture, infrastructure, ease of doing business, tax reforms, etc. Maintaining a fiscal deficit of 3.5 per cent is a very credible step.

The government's thrust on 'Make in India' by providing tax and duty benefits will go a long way in strengthening the manufacturing capabilities of India. Finance Minister has particularly laid emphasis on infrastructure across the country with a huge outlay for roads & highways, railways and developing 160 non-functional airports in the country is quite praiseworthy.
 
The Union Budget has laid greater emphasis on affordable housing. An additional deduction for interest of Rs 50,000 pa for loans up to Rs 35 lac and property prices up to Rs 50 lac, gives ample incentives for middle class borrowers, especially for those living in Tier II and Tier III cities. Service tax has also been exempted on construction of affordable houses up to 60 square metres.

For first time home buyers the additional interest deduction of Rs 50,000 per annum making a total deduction of Rs 4,00,000 pa ( Principal & Interest) on home loans will further encourage them to buy their own house.

HIGHLIGHTS:Union Budget 2016

Dividend Distribution Tax (DDT) is considered to be one of the biggest hurdles left in making REITs financially viable in India. The budget has proposed to remove the DDT on REITs. With most of the hurdles getting removed, we may see introduction of REITs in Indian market soon. This will help the developers to raise funds .

With the objective to have India's top Educational Institutes feature in the World's Best Educational Institutes, the Budget has proposed to set up Higher Education Financing Agency with initial capital base of Rs 1,000 crore to finance improvement in infrastructure in India's top institutions. Since this agency would also be mobilizing funds from the market, it has a huge potential to upgrade infrastructure of our top educational institutes resulting in better facilities and resources for the faculty and students. Since it'll also be able to attract funds from CSR and Donations, along with market borrowings, it can act as a great enabler to provide much needed financial resources to the top educational institutes.
 
A centralized Digital Repository for School Leaving Certificates, College Degrees, Academic Awards and Mark Sheets as announced in the budget, is another welcome initiative. With over 250 million students in India's education system, it's one of the largest in the world. Digital Repository would connect the entire eco-system of education, which would result in a centralized authentic and credible platform with enhanced discipline, which would be of great value not only to students and parents but also to the academic institutes, employers and even education loan lenders. It can also provide the platform where Education Loan related information can be integrated for everyone's benefit. Potentially it can have linkages to Aadhar and PAN card to create a world class repository of the entire Education Eco-System.

With the Prime Minister's vision to create "Skilled India", the budget announcement to allocate Rs 1,700 crore for setting up 1500 Multi-Skill Training Institutes across the country has the potential to have transformational impact on the youth of India. For the first time the budget seeks to provide Entrepreneurship training in over 2,200 colleges, 300 schools, 500 Govt ITI's and 50 vocational training centers through Massive Open Online Courses.

To sum up, in the backdrop of the prevailing domestic and global challenges, FM has done a great balancing act.

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