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Although the Interim Union Budget 2019 was populist on expected lines yet in our opinion it was pragmatic. The dole outs were across all segments – farmers, middle class and MSME. Surprisingly even the real estate sector which is reeling under severe financial stress was addressed with several sops. We believe that these measures will provide a significant boost to the stock markets as consumption spend and savings are expected to get a fillip.
We are extremely enthused by the fact that the populist measures have been undertaken without much deviation from the path of fiscal consolidation (3.4% fiscal deficit, 30bps increase as per FRBM target for FY20) and growth reforms. There are concerns raised around the funding side and the fact that the government projections with regards to tax receipts are aggressive. However in our opinion the growth projections of the overall tax receipts (14% growth) are very much in line with the historical 14% CAGR over the period FY14-FY18.
The budget also outlines a vision to grow the economy to USD 5 tn over the next 5 years and USD 10 tn in further 8 years on the back of the 10 dimensional roadmap.
Had it not been for the INR 20,000 cr in FY19 and INR 75,000 cr in FY20 farm largesse, the fiscal deficit would have been maintained at 3.3% and 3.1% for FY19 and FY20 respectively.
3.4% fiscal deficit means GDP to cross INR 2,00,00,000 cr in FY20.
INR 75,000 cr to benefit 12 cr families
Farmers owing land upto 2 hectares – INR 6,000 pa. First installment in March 2019 itself
INR 60,000 crs allocated for MGNREGA in BE 2019-2020.
Increased allocation to Rashtriya Gokul Mission to INR 750 cr
* Animal husbandry and fisheries -
* Push with 2% interest subvention to farmers who avail loan through Kisan Credit Card. Additional 3% interest subvention for timely repayments.
* Creation of separate fishery department.
Stocks to benefit – Stocks in Consumption Sector, Fertilizer and Agri -Resource
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