Post-Budget quote from Mr. Gopal Srinivasan, founding member of The Chennai Angels, Chairman of TVS Capital:
Arun Jaitley’s maiden budget is focussed on improving capital flow into multiple sectors of the economy through impactful yet simple and action-oriented policy changes. Providing scarce equity capital to small and medium businesses to fuel economic activity, and hence create jobs is a critical theme in the budget.
Investments in entrepreneurial activities through a Rs. 10,000 Crore MSME fund of funds, which will, presumably, route its capital through private equity funds is a welcome step. Making innovative institutional funding mechanism dedicated to fund Own Account Enterprises (OAEs) that represent most of India’s informal sector employment, is another important jobs focussed measure.
Increasing the velocity of capital, through disinvestment of PSU banks to retail shareholders, encouraging foreign fund managers to operate from India by rationalising taxation, and enabling REITs will drive capital flow, and hence economic activity. It should also attract more retail flows into equity markets, which today are allocated only 1.5% of house hold savings by retail investors.
Every good budget seems to have a miss. In this one, not providing “tax pass-through” for PE funds / AIFs (as was provided to REITs) was an important miss for the PE industry, which will hopefully be corrected soon.