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Union Budget 2018-19 : MSME and Rural focus not only good politics, but also good economics-Share India Securities Ltd

Mr Abhinav Gupta, President, Capital Market, Share India Securities Ltd, says "Imposition of LTCG at 10% was on expected lines even as market was expecting increase of holding period to 3 years instead of imposition of tax. However, having said that market was factoring in some level of taxation for long term holders of 1 years in equity segment. The budget now leads to low benefit of holding a stock for more than 1 year which should lead to higher trading by market participants. The tax would impact sentiment in negative effect which would be completely priced in over the course of next few days. This would certainly reduce the flow of domestic money through SIP route in second half of the year"
This budget in its perfect sense is a Roti-Kapada and Kisaan budget. The move to cut corporate taxes to 25 % for companies with turnover less than Rs 250 crore is great, will benefit MSMEs and enable them to have higher working capital and investment capex ,which is much needed in the current business environment. The strong focus on rural economy, agriculture, MSMEs,  health, is commendable and shows government's deep commitment towards  economic transformation. Rs 3 lakh crore for lending to MSMEs under MUDRA scheme for 2018-19 will help this sector,  which has over 32% share in the GDP, grow faster.  According to the National Sample Survey’s (NSS) 73rd round, there were around 634 trillion unincorporated non-agriculture MSMEs in India in 2015-16 providing employment to 111 million workers.

"Overall the Union Budget for FY19 is well rounded up with focus on rural and farm income. Even as there was minor fiscal slippage as expected by markets finance minister gave an infrastructure spend target of INR 5.9tn. Spend on fisheries and aqua industries was a positive surprise and should benefit Apex Frozen and Waterbase. Though headline tax for MSME segment with turnover of less than INR 2.5bn was reduced by 5% increase in cess would lead to net impact being balanced out" he added.




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