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* Interim Budget 2019: Different than the usual
The Modi government has seemingly once again managed to defy the convention by pulling off a Budget, which tilted more towards the nature of a full budget rather than an interim budget.
* Focus remained on stimulating the economy and consumer confidence
Considering the current scenario wherein the economy is running at sub-optimal utilization levels, the government concentrated on measures that would act as a stimulus to the economy and to consumer confidence, which is the primary need of the hour. Thus, the priorities in the budget were clearly focused on two important segments of the Indian economy – the middle-income group and the farmers. For the former, while the government has proposed income tax rebate to those having income of upto Rs 5 lakhs, a Rs 75,000cr relief package has been announced for the farmers community for FY20 and also a Rs 20,000cr farmer income support package for the current fiscal.
* Government priorities different; fiscal target overshadowed
With the government priorities different at the current juncture, we had expected the government's focus on fiscal deficit to be overshadowed by measures aimed at re-invigorating the economy. In line with this, the government has pegged the fiscal deficit target at 3.4% for FY20, which is a marginal negative considering that the objective of staying on course to reducing the fiscal deficit has been compromised for another year. Further, as the year progresses, this can turn out to be a bigger negative from the point of view of global ratings agencies' view on India and the domestic bond yields, if the government revenue collections do not move on the intended trajectory.
* From the stockmarket point of view
This Budget has been welcomed by the stockmarket, as it focuses on increasing the disposable income in the hands of a large section of the economy i.e. middle-income group and farmers. The budget proposals are a positive for sectors related to consumption, which include FMCG, Auto, Consumer Durables, Banks and Fertilizer / Agri. Moreover, with several announcements pertaining specific to the Real Estate sector in the Budget, this sector will stand to be a beneficiary over the medium-to-long-term. Thus, sectors related to and dependant on Real Estate will also stand to gain and these include Paints, Cement, Ceramics.
* To conclude
The General Elections are around the corner, a fact which was seemingly on the government's mind, and at the same time, a feel-good in the economy was the need of the hour. In this backdrop, the government has put growth (consumption) over fiscal discipline for next year. Overall, it was a good budget, which is aimed at setting the stage not just for the Election battleground at a micro level, but for pushing India's growth to a higher growth trajectory at the macro level in a challenging global and domestic set-up.
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