India's Spending, Taxation Package - Investment Industry Reactions

Editorial Staff

9 July 2019

India’s finance minister, Nirmala Sitharaman, recently outlined a range of spending and tax measures to boost the country’s economy at a time when growth has decelerated. One of those emerging market countries often seen as having big potential – with all that implies for wealth management – the health of India is important. The budget focused on increased infrastructure spending, easing rules around foreign direct investment, improving life in rural India, and providing financial support to the banking and financial sector.

The budget put up taxes on petrol and diesel; firms with annual turnover with an annual turnover cap of 4 billion rupees now pay 25 per cent in corporate tax, versus the older threshold of R2.5 billion.

Here are comments from investment firms:

Leong Lin-Jing, fixed income investment manager,
The intent to issue foreign currency bonds will be welcomed by the investment community. It is also very fortunate timing for India.

Renewed dovishness of central banks globally lead to the US 10-year inside 2 per cent and close to 20-year tights. In Europe, the Germany 10-year is at an all-time low, encouraging many emerging market sovereigns to raise capital in both the dollar and the euro.

For example, in recent months Chile and Indonesia tapped into the euro market. Additionally, having a benchmark hard currency curve makes it easier for corporates in the country to tap international markets. This is one of the reasons why China decided to issue dollar-denominated bonds in recent years.