India’s Budget Offers Investment Roadmap


India boasts the second fastest growing economy in the world and is a great place for NRI’s to seek new investment opportunities. For beginner investors, the idea might be a bit daunting but a great place to start your research is the Indian annual budget. In March, the Indian government released their annual budget, which more than most countries in the world provides a clear roadmap as to the state of the country, its economy and potential investments for the present year and up to five years in the future. By examining the areas where the government plans to allocate or reduce federal funding and cut or raise taxes can indicate the most lucrative industries for investors to sink their money into.

For example, this year the country has plans to close the financial deficit it finds itself in due to the poor state of the global economy. From 6.5%, India plans to reduce the deficit to 5.5% GDP for 2011 and to 4.8% for 2012. By focusing their resources on deficit containment, the government is fueling economic growth and helping to march the economy forward. This is great news of investors across the globe.

Also itemized in the 2010 budget, India plans to provide financial incentive to three of the fastest growing industries in the country. The real estate, infrastructure and agriculture sectors will see 12.7 billion rupees spent on slum rehabilitation, 310.36 billion rupees on school construction and 198.94 billion rupees on roads alone. With a middle class that is larger than the entire nation of the United States, and with 60% of the workforce employed in some form of agriculture, those three cornerstone sectors are essential to the welfare and livelihood of the entire country and make them great investment opportunities for NRI’s. The state also plans to allocate more funding for the financial sector and focus more on private sector banks. The industries that are being hurt by the newly released budget are the oil and gas sectors which will face subsidy cuts and higher taxes. Armed with this information, investors can thoughtfully invest their money in the sectors that are being supported by the government, while steering clear of the industries that will face financial blows.

Another emerging sector that is gaining support from the government is clean and renewable energy. The budget states that an allocation of 51.30 billion rupees is being diverted into the power sector and that 10 billion rupees will be spend on renewable energy in 2010-2011. The government also plans to create a fund that supports clean energy initiatives, but details of this fund were not outlined in the budget.

The government has stated that it will review the state of the economy and issue a status report six months following the passing of the country’s annual budget. This update will provide investors with a clearer picture of how the allocation of federal funding and the varying tax cuts and hikes have affected the above mentioned industries and what that would mean for their potential investments.

By-line:

This guest post is contributed by Jena Ellis, who writes on the topics of Online Certificate Programs.  She welcomes your questions and comments at her email Id: jena.ellis20@gmail.com.

One thought on “India’s Budget Offers Investment Roadmap

  1. Indeed the 2010 budget has opened the floodgates for investment in India. With the western forces still recovering from the economic slowdown, India has grabbed the opportunity and declared a lucrative budget. With its focus on sectors of agriculture and infrastructure, along with real estate and outsourcing segments, investment in India is much sought. The Budget accounts for over 46% of the total Plan allocation for infrastructure; and allocation for road transport has been given a surge by over 13%. The IT and real estate boom has seen returns doubling consistently in the past few years. Real estate sector has been approximated to have the potential to touch $90bn in the next 10 years. The Government is also focusing on liberalizing the norms for FDI, making it more NRI friendly. Services like home loans, NRI remittances and repatriation procedures are all offered by various financial service companies. What’s more, the financial services companies are also geared up to offer the best choices for investment!

    Thus, a PAN card and a Demat account have proved to be the only lock and key to high returns on investments.

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