Budget 2013: What NRIs should know about the FM’s proposals

Apartment Interior at The Grand Arch, Gurgaon

Apartment Interior at The Grand Arch, Gurgaon

“Post-independence, overseas Indians have served as a bridge of friendship and cooperation between India and their adopted homes abroad.” – said the Prime Minister, Dr. Manmohan Singh, on 8 January 2013 on the occasion of Pravasi Bharatiya Divas while emphasizing on the Government’s commitment to do all that is possible to deepen their connection with India and advance their interests.

However, not much has been offered to the Non Resident Indians (NRIs) by the Finance Minister, Mr. P. Chidambaram, in the Budget 2013-14. But, he did emphasize that Foreign Direct Investment ( FDI) and Foreign Institutional Investment (FII) are imperative sources to Finance the estimated $75 billion current account deficit.

The Budget 2013-14 highlighted that the Indian economy is looking at sources to inject funds in various sectors crucial for revival of the growth momentum. NRIs are an important audience that can augment this financial requirement.

Some of key changes proposed in the Budget 2013-14 that may impact NRIs are discussed below:

Investment in rupee denominated long term infrastructure bonds

In last year’s Budget, interest received by a non-resident on foreign currency denominated long term infrastructure bonds was subject to a concessional tax rate of 5%.

This year the Budget has proposed to extend such concession even where a non-resident deposits foreign currency in a designated bank account and such money as converted in Rupees is utilized for subscription to a long term infrastructure bond issued by an Indian company.

This will facilitate a non-resident to subscribe to rupee denominated long term infrastructure bonds issued by an Indian company in India.

Read more: The Economic Times

Call for relaxation of UK visa rules for India and China

Cable has been a long-standing critic of the govt’s immigration policies in view of the economic benefits associated with foreigners from countries like India

British business secretary has urged the nation’s Home Office to relax visa rules for international visitors, including those from India and China, to help promote inward investment.

Vince Cable has been a long-standing critic of the government’s immigration policies in view of the economic benefits associated with foreigners from countries like India.

“Their growth is essential to job creation and national economic recovery, as is the emergence of a new generation of Asian entrepreneurs,” the Liberal Democrat minister said during the launch here yesterday of the National Asian Business Association, a new coalition of regional British Asian business groups.

There are around 50,000 British Asian businesses in the UK, with the Tata Group leading the charge as one of the country’s largest manufacturers and employers in the sector.

Referring to British Asians as “probably the most entrepreneurial section of the British public”, Cable said: “We want inward investment and the technology that goes with it.”

Read more: The Economic Times

Economy

Tax boost for growth

The 15 per cent tax deduction proposed in the latest Union Budget to companies, on the value of their investments in excess of Rs 100 crore in plant and machinery couldn’t have come at a better time. Official GDP estimates for April-December, released only last week, show a tepid 5 per cent growth over the corresponding three quarters of 2011-12. But even worse is the annual growth of 0.09 per cent in gross fixed capital formation, capturing the sheer extent of a drying-up of investments in the economy. The Government has been under some pressure to demonstrate in some tangible way that it is serious about driving growth by reviving investments. In the circumstances, a 15 per cent ‘investment allowance’ would induce companies, at least those with capacity expansion plans, to go ahead and achieve maximum possible project progress within the next 24 months – the time window within which the proposed tax concession is available. And the fact that it has chosen this route – rather than the alternative of merely allowing companies to write off, for tax purposes, depreciation at an accelerated rate – shows an even greater seriousness of purpose.

Read more: Business Line

Good start to solving economy problems

Sometimes the first step to solving a complicated problem is to recognise the problem. By acknowledging that the Indian economy is currently challenged, the Finance Minister set the context for finding solutions to resolve our imbalances of slowdown, high twin deficits and elevated inflation levels.

Despite the compulsions of a pre-election year, the Minister has laid out a credible path of fiscal consolidation by budgeting to reduce fiscal deficit to 4.8 per cent of GDP in fiscal 2014. This is an important step, given the continued scrutiny of our fiscal situation by external rating agencies. As we lay out a path for growth recovery by resolving our stalled projects and kick-starting the investment cycle, renewed concerns regarding our sovereign rating would be significantly counter-productive.

Read more: Business Line

Market

Sensex surges 248 points; Realty, metal stocks hog the limelight

The Sensex and the Nifty ended the session on Tuesday with a gain of over 1.3 per cent led by metal, realty, auto and banking sector stocks amid firm global cues.

Domestic sentiment was buoyed after Finance Minister P. Chidambaram said that the Government will soon announce more measures to boost economic growth.

The Sensex was up 248.32 points (1.32 per cent) at 19,126.28 and the Nifty was up 82.9 points (1.45 per cent) at 5,781.40.

All BSE sectoral indices ended in the green. Among them, Realty index was up 3.13 per cent, followed by Metal 2.65 per cent, Banking 1.89 per cent and Auto 1.78 per cent.

European stocks climbed to a 4 1/2- year high amid speculation that central banks around the world will continue with stimulus measures to support economic recovery and as China maintained its economic growth target for 2013-14.

US index futures and Asian stocks were also up.

Japan’s Nikkei 225 was up 31.16 points or 0.27 per cent at 11,683.45, while Hong Kong’s Hang Seng was up 77.06 points or 0.34 per cent at 22,614.87.

Banking

NHB rolls out special scheme to help boost fixed rate home loans

To encourage fixed rate home loans for the low- and moderate-income segments, the National Housing Bank (NHB) has come out with a special refinance scheme for banks and housing finance companies (HFCs).

Banks and HFCs giving fixed rate home loans up to Rs 10 lakh can get refinance for 15 years from NHB at a concessional interest of 8.60-8.75 per cent, according to R.V. Verma, Chairman and Managing Director, National Housing Bank.

Fixed rate home loans are aimed at mitigating the interest rate risk that retail borrowers face, he added, on the sidelines of a conference where MoUs were signed between Credit Guarantee Fund Trust for Low Income Housing and six institutions, including Bank of Baroda and IDBI Bank.

However, Verma observed that over 90 per cent of the home loans is on floating interest rate due to retail customers’ preference.

“We need to create awareness about the refinance scheme among the lending institutions. Home loan borrowers in the low/moderate-income segments could be benefited if they get fixed rate loans,” he said.

Read more: Business Line

Real Estate

US firms to dominate Indian office realty this year too

American companies will continue to dominate the office space real estate in India. The list of companies that committed to lease office space in the country this year include Goldman Sachs, Google, Amazon, iGate, Oracle, Wells Fargo, United Health Group, Accenture, Fidelity, Dell, Adobe, Cognizant, among others.

No surprise there, as 70 per cent of the office space in the country is taken up by US companies on lease annually, and this has been the trend for four to five years. However, this year is different. The US has just announced a $85-billion spending cut, and American companies are under the slowdown pressure. Experts point out while the overall sentiment is negative, the developments will actually translate into steady activity in commercial real estate in India.

Since American companies dominate the Indian office space, any slowdown in the US is negative for the Indian realty, said Anshuman Magazine, CMD (South Asia), CBRE, a leading real estate consultancy firm.

However, a large chunk of office space in India is still taken up by the information technology (IT) and IT enabled Service (ITeS) sector, and as US goes through the slowdown, firms will try to increase outsourcing to optimise cost and improve efficiency, Magazine said.

Read more: Business Standard

Budget 2013: FM’s home loan incentive cheers up realty players

Finance minister P Chidambaram’s incentive to first-time home loan takers has come as a boon to the real estate developers who have been saddled with a growing pile of unsold stock over the past two years.

The industry expects the proposed incentive in the budget, by way of additional tax deduction on interest of up to 1 lakh on a loan of up to 25 lakh, to spur demand, especially in the 30-40 lakh category.

Of the 583,513 unsold apartments across the country, 39% cost less than 35 lakh. In the national capital region, 50% of the unsold apartments are in this segment while the figure is 30% in Mumbai, according to property research firm Liases Foras. In 2012, 42% of homes sold in the country were in this category, with buyers taking a loan of 25 lakh on average.

In the national capital region, developers say the budgetary proposal has already led to increased interest among potential buyers in Raj Nagar Extension in Ghaziabad, Noida Extension in Greater Noida and along the Yamuna Expressway.

“We have got good enquiries already after the budget. This will help us clear unsold stock,” said Gaurav Gupta, director at SG Estates, which has projects in Raj Nagar Extension.

RK Arora, chairman of Supertech, said most of the enquiries pertain to the segment that stands to benefit from the budget.

Read more: The Economic Times

Infrastructure

Work on Metro Stretch Begins

Taking a step forward towards construction of a metro corridor connecting Badarpur with YMCA Chowk (13.87km), the Delhi Metro Rail Corporation on Monday launched the first precast span (girder). Two cranes of 400 tonne and 330 tonne capacity each were used to lift a 150-tonne and 27-metre-long U-girder to put it on the viaduct near the proposed Old Faridabad Metro station. This corridor will be an extension of the existing Central Secretariat-Badarpur corridor, which is further extended from Central Secretariat to Kashmere Gate.

Hindustan Times (Delhi edition)

 

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