Pranab reveals Jaitley's cards: 7 points from President's speech that investors are cheering

President Pranab Mukherjee in his address to both houses of Parliament may have revealed what can be expected from the Narendra Modi government, and what we can expect from new Finance Minister Arun Jaitley when he presents his first budget.The markets, which have been in good cheer, came off the highs after the president’s address due to mild profit booking.

However, some stocks reacted positively as the speech focussed on reviving the economy through special emphasis on infrastructure.

“The president has touched all the grass root realities,” Deven Choksey of KR Choksey Securities, told CNBC-TV18.

The intentions he has made in the speech are strong and the commitments given are extremely positive, he said.

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Member of the BSE, Dipen Mehta, meanwhile, was of the view that whatever the president said in Parliament was already spoken about by the BJP and Prime Minister Narendra Modi.

The market is now waiting for specific steps. These are likely to be revealed in the budget and the markets will come to know of it in the next two months or so, he said.

“The President has today laid out a blue print, a vision statement and it is positive,” he told the TV channel.

Some of the stocks that reacted positively to the president’s speech are Kalindee Rail, Texmaco (on railway modernisation plans), Sterlite Tech, Hathway Cables (on digitisation push) and L&T and Power Grid (on infrastructure thrust).

Here are the 7 things he said that might have put a smile on investors’ faces:

Containing food inflation to be highest priority

President Pranab Mukherjee made it clear that controlling food inflation would be the topmost priority for the new government.

“There would be an emphasis on improving the supply side of various agro and agro-based products. My government will take effective steps to prevent hoarding and black marketing. It will reform the Public Distribution System, incorporating best practices from the States.”

He also said that the government was prepared for the possibility that there could be a below normal monsoon this year and had prepared contingency plans.

The President said that the government will complete long pending irrigation projects on priority and launch a new ‘PM’s irrigation scheme’ that would have as its motto: “Every farm must get water.”

Policy to be made transparent

Promising that the government would create a policy environment that was “predictable, transparent and fair”, the President promised that the government would rationalise and simplify the current tax regime to boost investment.

“My government will make every effort to introduce the GST while addressing the concerns of States. Reforms will be undertaken to enhance the ease of doing business. My government will follow a policy of encouraging investments, including through FDI; which will be allowed in sectors that help create jobs and assets,” he said.

The government will work to promote labour-intensive manufacturing to create jobs quickly, he said.

“The government will set up world class investment and industrial regions, particularly along the Dedicated Freight Corridors and Industrial Corridors spanning the country,” the president said.

Railways to be modernised

The Railway Budget may be a little more exciting than usual this year with the President saying that the modernising of the railways will be the top most infrastructure priority of the government.

“My government will launch a Diamond Quadrilateral project of high speed trains. The country will have a network of freight corridors with specialised Agri-Rail networks for perishable agricultural products. Investment in railways will be increased using innovative financing methods,” Mukherjee said.

He said that the government will encourage R&D and high level local manufacturing for railway systems.

Defence sector to be opened up for FDI

The President has promised that the government will carry out reforms in defence procurement and will encourage even the private sector to be involved in the manufacture of equipment.

“We will introduce policies to strengthen technology transfer, including through liberalised FDI in defence production,” he said.

Forest clearances to be faster, more transparent

Saying that the government believed that development can go hand in hand with environment conservation, Mukherjee said that environmental clearances for industry would be more transparent from here on.

“…Environment and forest clearance systems will be made more predictable, transparent and time-bound. Simultaneously, an effective system will be developed for sound appraisal processes and strict compliance of clearance conditions, especially those relating to rehabilitation of displaced communities and regeneration of forests,” Mukherjee said.

He also said the government would work on furthering the use of cleaner fuels to bring down pollution in the cities.

More broadband networks, wi-fi and IT-enabled services

Claiming that the backbone of the new government’s working will be information technology, the President said that the government will improve service delivery.

“We will strive to provide Wi-Fi zones in critical public areas in the next five years. My government will rollout broad band highway to reach every village and make all schools e-enabled in a phased manner,” he said.

Education and setting up of IITs, IIMs in every state

President Pranab Mukherjee said that the government will lay special focus on education across the country and will set up “Massive Open Online Courses and virtual classrooms.”

“It will formulate a National Education Policy aimed at meeting the challenges posed by lack of quality, research and innovation in our educational institutions. We will set up IITs and IIMs in every state. In order to empower school teachers and students, a national e-library will be established,” the president said.

(You can read the complete speech by the President here)