JULY 08, 2019 News the Newsbehind 29
indianeconomicpanoramaunderlining the importance of rural
rejuvenation for Modi 2.0. “At the centre
of everything we do, we keep ‘gaon, garib
aur kisan’, (village, poor and farmer)” she
said. Th e government has promised to
deliver 19.5 million houses with toilets,
electricity and gas connections by 2021-
- Addressing rural unemployment,
the FM announced a new scheme to
establish a robust fi sheries management
network and a boost to agriculture-
based traditional industries.
From raised spending on road
building to connect villages, to more
rural homes built with power and fuel
connections and support for small
businesses producing cattle feed, the
government’s continued push could
benefit companies with exposure to
rural India.
Forming 10,000 farmer producer
organisations (FPOs): But specifi cally,
for the rural sector, plans to form
10,000 farmer producer organisations
(FPOs) in the next fi ve years, is good
since this is expected to help small and
marginal cultivators team up to get
lower rates for inputs and sell produce
at higher rates.
Indian farms are highly fragmented,
making it diffi cult for farmers to adopt
modern practices and technology. Th e
small and marginal land holding area
increased to 47.4% in 2015-16 from
38.9% in 2000-01, while that of large
holdings decreased to 20% from 37.2%
in the same period.
“The budget proposal to set up
10,000 FPOs is a path-breaking step to
ensure economies of scale for farmers,”
said H K Bhanwala, chairman of
National Bank For Agriculture And
Rural Development (Nabard).
“The existing FPOs are not able
to grow as they cannot raise capital.
Th e government could have allowed
investment by venture capital for private
equity funds in this sector,” said Vilas
Shinde, chairman of India’s largest FPO,
Sahyadri Farm.
Urban thrust: Urban renewal has
always been a top agenda for the
Modi government. Modi 2.0 has tried
to address the slump in real estate
market with a host of sops for the
aff ordable housing sector. Apart from
this, there has been an increase of 10%
in the allocation under AMRUT (Atal
Mission for Rejuvenation and Urban
Transformation) and Smart Cities
Mission.
Th e government has also revealed its
intention to correct the rental housing
market with a much-awaited and
delayed tenancy policy.
SOPS FOR TRADING
COMMUNITY
Th e Budget promises pension to
30 million retail traders and small
shopkeepers whose annual turnover is
less than Rs 1.5 crore.
The trading community, which
formed the traditional vote base of BJP
in Delhi, has been angry with the party,
especially after a drive to seal illegal
commercial establishments. Though
the government has addressed the issues
with changes in the city’s master plan,
the pension scheme would go a long
way in assuaging them.
INDIA’S OWN DAVOS
Th e Finance Minister announced
that India is contemplating organizing
an annual global investors’ meet in the
country, akin to the World Economic
Forum in Davos, to carve out a bigger
global role for itself. Th e move will help
create a niche for Asia’s third-biggest
economy within the international
fi nancial system.
China already has its own version
of such a summit, known as the Boao
Forum for Asia.
Th e idea for holding a summit is
being mooted at a time the government
is looking to attract more investments
from overseas as it seeks to spur
economic growth and generate more
jobs. India also wants to tap investorswho can help fund 100 trillion rupees
($1.5 trillion) to build infrastructure
over the next fi ve years.
“It is high time India not only gets
integrated into global value chain of
production of goods and services, but
also becomes part of the global fi nancial
system to mobilize global savings,
mostly institutionalized in pension,
insurance and sovereign wealth funds,”
said Sitharaman.
REFORMS IN CAPITAL
MARKETS
Th e FM proposed to bring about
large scale reforms in capital markets
such as higher minimum public
shareholding in listed entities to 35 per
cent from 25 per cent now, providing
more investment limit to foreign
portfolio investors (FPI) in listed
entities and ushering in debt market
reforms of deepening the corporate
bond markets.
SINGLE BRAND RETAIL
Plans to ease local sourcing rules in
single brand retail are set to help Apple
the most among other foreign companies
such as OnePlus and Oppo wanting to
open their own stores in India, said
analysts and sector watchers.
The move is aimed at attracting
higher foreign investment at a time
when global foreign direct investment
(FDI) flows have slowed but those
coming into India have been robust.
“Global FDI fl ows slid by 13% in
2018 to $1.3 trillion from $1.5 trillion,
as per the world investment report...
India’s inflows remained strong at
$64.37 billion marking a 6% growth
over previous year. I propose to further
consolidate the gains in order to make
India a more attractive FDI destination,”
Finance minister said.
“Local sourcing norms will be eased
for FDI in single brand retail sector,”
she added.
“Th e relaxation of mandatory 30%
local sourcing norm will spur the