Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Will Budget 2017 Spur Private Investments?
Thu, 2 Feb Pre-Open

The Union Budget is one of the nation's most closely watched events-not just for the numbers, but also for the announcements that chart the roadmap for economic development in the upcoming year.

This year's Budget was no different. The Finance Minister, Arun Jaitley, announced a slew of amendments, policies, exemptions and proposals to kick-start the economy. They ranged from agriculture, rural development to tax developments, private investments, etc.

What measures were announced to revive private investments?

First, the FM proposed to do away with the Foreign Investment Promotion Board (FIPB). The rationale here was to reduce the additional bureaucracy. As per Jaitley, India has reached a stage where it no longer needs a bureaucratic body to entice foreign investments.

In the recent past, the government has relaxed requirements of obtaining prior government approval for investments in many sectors. This has meant voluntary inflow of investments in many sectors. Further, except for a few sectors like defence and retail, the government has allowed foreign investors to invest in India under the automatic route. As a result, more than 90% of the total FDI (Foreign Direct Investment) inflows now come through the automatic route rather than the approval route.

So the role of FIPB was gradually coming down.

In cutting out the FIPB from the picture, the FM aims to significantly cut red tape measures and reduce the bureaucratic burden on foreign investments.

Secondly, the budget also proposed further liberalization of the FDI policy. If this goes through, there will be more businesses willing to invest in India. This will translate pick-up in the investment engine in India.

Moving ahead, the government also provided clarity to foreign portfolio investors (FPI) as regards to taxation under the direct transfer route. Mr. Jaitley said that FPIs under category 1 and 2 of alternative investment funds are exempted from indirect transfer provisions.

Just Released: Multibagger Stocks Guide
(2017 Edition)

In this report, we reveal four proven strategies to picking multibagger stocks.

Well over a million copies of this report have already been claimed over the years.

Go ahead, grab your copy today. It's Free.

NO-SPAM PLEDGE - We will NEVER rent, sell, or give away your e-mail address to anyone for any reason. You can unsubscribe from The 5 Minute WrapUp with a few clicks. Please read our Privacy Policy & Terms Of Use.

This move will spur foreign investments as it would give clarity to FPIs who had pulled out money from the Indian markets amid uncertainties of tax laws.

All in all, the above developments announced in the budget seem to be a step in the right direction. They have the potential to promote private investments, and in turn foster economic growth.

Currently, there are many reasons that are holding private investments back. India Inc. remains stuck under loads of debt. Capacity utilisation levels are in doldrums. And banks, overwhelmed by huge amounts of corporate loans turning bad, do not seem eager to extend loan to Indian companies.

Overall, the budget seems to have positive policies in store for speeding up investments in the economy. However, as regards to any policy, how the policy is implemented will be the key thing to look out for going forward.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Will Budget 2017 Spur Private Investments?". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Jan 18, 2018 (Close)