BENGALURU, July 5 (Reuters) - Prime Minister Narendra Modi's government on Friday proposed giving foreign investors a bigger role in India's giant insurance and aviation sectors to help reverse weakening growth and investment that threatens to take the shine off its recent landslide election victory.
Finance Minister Nirmala Sitharaman unveiled the proposals while presenting the budget for the fiscal year ending March 31, 2020 to parliament, the first since the Hindu nationalist-led government was re-elected in a vote in April and May. COMMENTARY RAJIV SINGH, CEO, STOCK BROKING, KARVY, HYDERABAD "The nominal GDP growth assumption is realistic and can be achieved with giving a boost to infrastructure. The economy has enough strength to achieve this growth rate, however, the risk to this forecast would be from a financial market turmoil, or an increase in commodity prices like oil which may result in a significant depreciation of the rupee."
"The increase in public shareholding from 25% to 35% is a good step for deepening of capital markets. It also means that many companies will need to increase their public shareholding, mostly by selling of promoter stake or additional equity issuance. The requirement to meet 35% would result in companies needing to offer approximately 1 trillion rupees to the public."
"The additional supply of equity should keep a lid on valuations, but in the longer term, (it) should help in getting more retail money in equity markets." VIVEK GUPTA, PARTNER AND NATIONAL HEAD M&A/ PE TAX, KPMG, NEW DELHI "The move to increase minimum public shareholding for listed companies from 25% to 35% must be implemented carefully. Timing, applicability, etc (need) to be closely evaluated. We don't want this to be another 'forced sale'. (This is a) good opportunity for institutional capital and funds." ANIL TALREJA, PARTNER, DELOITTE INDIA, MUMBAI "The proposed announcement to increase minimum shareholding threshold from 25% to 35% is a move to increase public participation in listed entities, thereby fortifying the fundamentals of governance."
"One would need to evaluate once the fine print is available (as the FM mentioned that SEBI will be issuing the requisite circulars) as there would be some clarifications expected, including on grandfathering of existing situations, movement to the desired threshold." SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI "The government has the primary focus on infrastructure building. However, we need to see what the cost and budgeting of the same will be." DEEPAK JASANI, HEAD OF RETAIL RESEARCH, HDFC SECURITIES, MUMBAI "The budget is not very different from the interim budget even as market participants await fiscal deficit proposals."
"Trade will be fluctuating. Until the fiscal deficit proposals are heard, one should not jump to conclusions."
(Reporting by Chandini Monnappa, Krishna V Kurup and Chris Thomas in Bengaluru; editing by Uttaresh.V)