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Pre-Budget views, expectations

Kotak General Insurance: Lower GST from the current 18% to 5%

Mahesh Balasubramanian, MD & CEO: Lowering the GST rate for insurance products will make it more affordable for customers and aid in increasing penetration. Lowering the GST from the current rate of 18% to 5% will greatly benefit the industry & consumers. Also, today the investment returns on both shares and securities for general insurance companies are treated as business income and hence taxed at the corporate tax rates which are between 25-30%.  If this can be brought on par with life insurance companies where the applicable rate is 12.5% or treat the same as capital gains and tax it at the rates applicable for short team or long-term capital gains as the case may be, it will be a significant boost for the industry.

I am sure that revision of deduction limits on health insurance policies and allowing flexibility in claiming deductions for multi-year policies, done in the last union budget, has greatly benefited the consumer. On the back of such initiatives, health insurance is likely to grow at around 25%, higher than the GI industry which will around 15-17%.

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ICRA: MSMEs, PM Awas Yojana to be focus areas

AM Karthik and Ms. Supreeta Nijjar, VPs & Sector Head-Financial Sector Ratings: Given the Union Government’s focus on alleviating the stress faced by the micro and small and medium enterprises (MSMEs) and on furthering its other initiatives including the Pradhan Mantri Awas Yojana (Urban and Rural), we expect allocation towards the above to be one of the key focus areas in the upcoming Vote on Account to be presented in February 2019. Considering the current tight liquidity situation, some announcements to support a steady and seamless flow of credit to NBFCs/HFCs are expected.
These may include increase in the refinance to the sector, a priority sector tag for bank credit to NBFCs based on their on-lending, relaxation in securitisation norms to make high-yielding (currently capped for loans not exceeding 8% of the base rate of the investing bank) loans eligible for sale, and relaxation in risk weights for capital allocation by banks on their exposures to the sector.

NBFCs inclusion under Section 43D of the Income Tax Act, so that taxable income on non-performing assets (NPAs) could be computed on a realised basis is expected, the same would improve their profitability and reduce cash outflow. Any changes in the income tax slabs for the tax-paying middle class or in the deduction limit under Section 80C which would impact retail credit demand and would thus remain a key monitorable.

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BoB: Allocation to rural/farm sector & housing to see a boost

Sameer Narang, chief economist, Bank of Baroda: We believe the FY20 interim budget will carry forward the government’s focus on bolstering rural & farm incomes and infrastructure. Allocation to the rural/farm sector in the form of income support, crop procurement, subsidies, subventions and housing is thus likely to see a large boost. In our view, sustained buoyancy in direct taxes will support this fiscal largesse, containing the FY20E fiscal deficit at 3.3% of GDP, at the same level as FY19. We believe the government will stick to its stated fiscal deficit target of 3.3% of GDP in FY19.

Rural theme to remain a priority: In FY19, the government has focused on increasing rural incomes through higher MSPs and farm procurement, interest subventions and building rural infrastructure (roads). Healthcare has also received attention with implementation of the Ayushman Bharat insurance scheme. Ministry-wise spends in FYTD19 have been geared towards the above objectives. We believe the FY20 Budget will continue to train a spotlight on these key areas. In FY20, we expect the consolidated fiscal impulse to remain neutral.

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Sarvatra Technologies: Extend financial support for PACs

Mandar Agashe, Founder and Vice Chairman: We expect the upcoming budget 2019 to be a multi-bagger. We hope the finance minister renders enough attention to the farmer community and the middle-class section of the country by extending financial support for PACs (primary agricultural societies) to undertake total computerization which in turn will facilitate the implementation of digital payment solutions. Similarly all non agricultural credit societies also called Urban credit societies should be allowed to be part of sub member program of RBI and should be rendered financial support in the budget to launch Rupay debit cards and other digital payment products like micro ATMs such that they are capable of operating at par with DCCBs and RRBs. Also fintech companies working in rural India should be given subsidies for building awareness which will enable them to on-board more and more rural population on to the digital platform.

CARE Ratings: Universal Basic income will be a part of the agenda

Madan Sabnavis, Chief Economist, CARE Ratings: Universal basic income will be a part of the agenda though may not be implemented this time. Existing schemes are more likely to be considered under UBI as and when it is taken up. Higher subsidies and capex look likely this year. Fiscal slippage of up to 0.2% of GDP is expected in FY19 with disinvestment and GST being the underperforming components.

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SEA: Raise duty difference to 10% to support domestic refining industry 

Dr. B. V. Mehta, Executive Director, Solvent Extractors’ Association of India: Regarding reduction in duty difference between CPO & RBD Palmolein, which has seriously repercussion on domestic refining industry, we plead to restore 10% duty difference between crude and refined palm oil to save the domestic industry from ruin. With customs revenue from oil imports now touching a whopping Rs30,000+ crores per annum, it would be in fitness of things to divert part of this money to Oilseed Development Fund. We are seriously hopping to have some favourable news in the forthcoming budget.

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CASHe: Tax cuts in digital transactions, more money for digital lending

V Raman Kumar, Founder & Chairman: Start-ups and Fintech companies are eagerly looking forward to the budget for a fresh impetus to their growth momentum. The government should seriously consider abolishing the “Angel Tax”. It is hampering investments in start-ups. We expect the government to announce tax concessions in digital transactions which will in turn encourage electronic transactions across the industry. We also hope the government provides more clarity on the e-KYC process which has created a lot of ruckus in the system. An alternative and smoother way of processing KYC should help ease the cumbersome process of new customer acquisitions. Also a new policy framework for adoption of newer technologies like Electronic National Automated Clearing House (e-NACH) and DigiLocker will help the industry and the end consumer at large.

The finance ministry should consider allocating more money in the digital lending sector in the upcoming budget. It should also further strengthen the Fintech and NBFCs who provide credit facilities to the interiors of the country. Offering relaxation will enable NBFCs to offer credit effortlessly and effectively. Setting up of refinance organizations for NBFCs, similar to SIDBI, NABARD etc will help avoid liquidity crisis.

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