Union Budget 2019 Highlights: Bringing Cheer for Angel Investors in India, Infrastructure Development, FDI in India and More

 

Union Budget 2019 Highights: Union Budget 2019 announces INR100L cr investment for infrastructure in next 5 years. Capital expenditure of c. INR1.6L cr for the Ministry of Railways proposed. Startups and investors who file requisite declarations not to be subjected to any kind of scrutiny. Budget 2019 strives to make India a more attractive FDI destination, easily accessible to foreign investors. US Corporate Sector applauds the move. An expenditure of INR70,000cr to be provided to Public Sector Banks (PSBs) in order to boost capital.

 

Moving on to the top Business news of the day.

 

 BUDGET FOR INFRASTRUCTURE 

Union Budget 2019 announces INR100L cr investment for infrastructure in next 5 years. Capital expenditure of c. INR1.6L cr for the Ministry of Railways proposed.
 


Connecting India: Finance Minister of India, Nirmala Sitharaman in her maiden Budget Speech on the 5th of July announced an investment of INR100L cr in infrastructure in the next five years. An expert committee would be set up to oversee the same.

 
 
Need for Speed: In the highest-ever allocation, the Union Budget 2019, proposed a capital expenditure of c. INR1.6L cr for the Ministry of Railways. 


 
Buckle Up: The Finance Minister also noted that the railway infrastructure would need an investment of INR50L cr between 2018 and 2030, and pushed for the public private partnership (PPP) model in order to achieve quicker development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.

 

 BUDGET FOR STARTUPS 


Startups and investors who file requisite declarations not to be subjected to any kind of scrutiny.
 
 
Ghost of the Past?: In an attempt to nip the problem of Angel Tax in the bud, Nirmala Sitharaman in the Budget yesterday announced that investments in startups from a more diverse set of funds will now be exempted from the dreaded angel tax.
 
 
Until now exemptions were restricted to a certain category of Alternative Investment Funds (AIFs) and any investment made by Category-II funds in startups was construed as income. 
 
 
FYI: Category-II AIFs primarily include private equity funds, venture debt funds, real estate funds and funds for distressed assets. Category-I funds include impact funds, venture capital funds and infrastructure funds.
 
 
Other announcements include a TV programme for startups, focusing on matching startups with venture capital investors for fund raise and tax planning, and easing foreign direct investment rules for startups in segments such as grocery, e-commerce, and food delivery.

 
The Other Side: While many cheered the steps taken to handle the feared Angel Tax, startups in the fintech, EV and healthcare sectors rooted for a clearer regulatory framework.
 
 
 BUDGET FOR FOREIGN INVESTORS 
 
Budget 2019 strives to make India a more attractive FDI destination, easily accessible to foreign investors. US Corporate Sector applauds the move.

 
Standing Tall: The Finance Minister in the Union Budget presented yesterday noted that the FDI inflows into India have remained robust despite global headwinds. As per UNCTAD's World Investment Report 2019, India's FDI inflows in 2018-19 remained strong at $64bn a 6% growth vs the previous year.
 
 
  • Government to consider increasing FDI in aviation, media
  • 100% FDI allowed for insurance intermediaries
  • Local sourcing norms to be eased for FDI in single-brand retail such as Apple
  • Statutory limit for foreign portfolio investment in a company revised from 24% to sectoral foreign investment limit
  • FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs
 
Comments Please: The American corporate sector hailed the Budget, noting that it is not only inclusive but also attractive for foreign investments.
 
 
'We are pleased to see a 2019-2020 Budget that delivers a forward-looking and reform-minded approach for the Modi government's second term,' said Nisha Desai Biswal, President of US India Business Council said.
 
 
 BUDGET FOR BANKING 

An expenditure of INR70,000cr to be provided to Public Sector Banks (PSBs) in order to boost capital.
 
 
Budget Saving the Day: In an attempt to resolve the liquidity issues of both banks and NBFCs, particularly in light of the recent IL&FS and DHFL scams, the Union Budget has proposed an injection of INR70,000cr into PSU banks.
 
 
The move is expected to open funding avenues for financially-sound NBFCs and provide partial credit guarantee for PSBs for the purchase of pooled assets of financially-sound NBFCs.
 
 
And…: In this light, the government has also proposed to confer upon the RBI the additional power over NBFCs and Housing Finance companies to streamline regulations and implementations.
 
 
Also This: In addition to this, the Budget proposed numerous measures to boost the debt markets. It proposed the setting up of a Credit Guarantee Enhancement Corporation to enhance the sources for infrastructure financing.
 
Agree to Disagree: As per this intriguing article, the Finance Minister has chosen to be fiscally conservative, opting to play the long-term game. However, this could lead to pain in the short term. Read more on this here. (Tweet This)
 
 
 OPINION 

What does Budget 2019 mean for the taxpayer? Budget 2019: An integrated approach to economy, but lacks details on implementation.
 
 
Richer or Poorer: The Union Budget 2019 presented in the parliament yesterday whilst was relatively light in terms of taxation, proposed a penalizing and unnecessary surcharge on individual income of INR2-5cr and over INR5cr by 3% and 7% respectively. Check out where you stand. 

 
A well-crafted document, with an integrated approach to economy, it is opined that Nirmala Sitharaman has done a rather good repair job on the fiscal front, especially in the trimming down of the fiscal deficit to 3.3% of GDP. Here’s a deep-dive into some of the interesting aspects of the Union Budget. 
 
The Budget was presented with the mega aspiration to take India to $5tr economy by 2024-25. However, given the limited time, the Budget seems to have more directional pronouncements, often lacking details on the implementation. Read this to know more. 
 
 
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