Prime Minister Narendra Modi addressed the nation after his government presented the interim budget. He started by highlighting that poverty is falling at record rates because of the government’s efforts.
The government's policy has improved everyone's lives in the country, said Modi, adding that everyone has been taken care of in Budget 2019.
To support the growing aspirations of the middle class, the government has taken steps to reduce the tax burden for them. This is only possible because of the better off sections of the society and when they pay taxes, he added.
Tax breaks for the middle-class income group and sop for India's small and marginal farmers keeps the status quo on the fiscal front, said Chakri Lokpriya, managing director and chief investment officer at TCG Advisory Services. "From that perspective no negatives is a positive in the current budget," he said.
Jinesh Gopani, Head of Equities at Axis Mutual Fund agreed that Union Budget 2019 was a balanced one for markets. "Not much negative on the fiscal deficit front, particularly good for the consumption story," he said.
"The marginal slip in the fiscal deficit for FY 2018-19 is par for the course, given that the rural direct benefit transfer scheme starts from Dec 2018 itself. The estimates for FY20 are also not very aggressive with an assumption of a 11.5 percent nominal GDP growth and tax buoyancy of about 1.25," said UR Bhat of Dalton Capital Advisors. Bhat said that the government has displayed "maturity and a sense of responsibility" by not going overboard while also addressing the pressing concerns of the vulnerable sections of voters.
"This strongly suggests that the NDA expects to be re-elected in the forthcoming federal elections," Bhat said.
Finance Minister Piyush Goyal says the budget has directed its focus on poorest and middle class. The government has made provisions for income support and maintaining fiscal discipline, he said.
Goyal said the agri sector moves will benefit 12.5 crore farmers.
Speaking about the Kisan Samman Nidhi scheme, Union Minister for Farmer Welfare Radha Mohan Singh said that the scheme has been put into motion since Dec. 1, 2018. "In 2018-19 financial year, for months before March, Rs 2,000 will be transferred to farmers' accounts, and in the financial year 2019-20 farmers will get Rs 6,000," he said.
Q3 Results: SBI’s Profit Beats Estimates
#Budget2019 | Deloitte India’s Homi Mistry on the big winners from Piyush Goyal's maiden budget.
— BloombergQuint (@BloombergQuint) February 1, 2019
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For an interim budget, Finance Minister Piyush Goyal's budget saw quite a few policy changes and expenditure schemes.
Here are the top five announcements from his speech.
- Proposal to scrap income tax for those earning upto Rs 5 lakh
- Proposal to launch a pension scheme for unorganised sector workers, setting aside Rs 500 crore for it in FY20
- A proposal to transfer Rs 6,000 to accounts of small and marginal farmers per year under the new "Kisan Samman Nidhi" scheme. Rs Rs 75,000 crore has been budgeted for this in FY20.
- Fiscal deficit target for FY20 set at 3.4 percent, higher than the 3.3 percent target set for the current fiscal.
- Divestment target set at Rs 80,000 crore for FY20, same as that set for the current fiscal.
Shares of M&M rallied nearly 5 percent after its last month's auto sales rose 7 percent on a yearly basis to 55,722 units. Its tractor sales rose 1 percent on a yearly basis to 22,065 units during the period.
Key Sales Highlights (Auto Division, YoY)
- Passenger vehicle sales rose 1 percent to 23,872 units.
- Utility vehicle remained flat at 22,263 units.
- Cars and vans segment rose 11 percent to 1,609 units.
- Commercial vehicle sales rose 8 percent to 22,625 units.
- Three wheeler sales rose 27 percent to 6,003 units.
- Total domestic sales up 6 percent at 52,500 units.
- Total exports jumped 22 percent to 3,222 units.
Tractor Sales Highlights (YoY)
- Domestic sales up 1 percent at 20,948 units.
- Exports up 2 percent at 1,243 units.
The government to receive Rs 74,100 crore this year and Rs 82,900 crore in next year as dividend from RBI and state-run banks in FY20. The disinvestment receipts are seen at Rs 90,000 crore in FY20
There will be no allocation of any sum to recapitalise banks in FY20.
Other key numbers
- FY20 fertilizer subsidy seen at Rs 74,990 crore versus Rs 70,080 crore in FY19
- FY20 food subsidy seen at rs 1.84 lakh crore versus rs 1.71 lakh crore in FY19
- Gross tax revenue seen at Rs 25.52 lakh crore for FY20
- FY20 petroleum subsidy seen at Rs 37,480 crore versus Rs 24,830 crore in FY19
Finance Minister Piyush Goyal in his budget speech announced a 10-point strategy to drive the economy’s growth over the next decade.
Ten Dimensions:
- To build physical and social infrastructure for a $10-trillion economy and to provide ease of living.
- Digital India reaching every sector of the economy.
- Making India a pollution free nation.
- Generating massive employment built upon the “Make In India” programme to develop grassroots level clusters.
For the rest of the six dimensions, click here
The scheme of giving to rural farmers Rs 500 per month under two hectares of land will be positive for staples consumption. It will not drive big ticket up consumption.Sunil Duggal, CEO, Dabur India
Budget 2019: Government Proposes Income Tax Breaks For The Middle Class Ahead Of Elections
India’s finance ministry is budgeting for borrowings of Rs 7.04 lakh crore for the fiscal year starting April 1, people with knowledge of the proposal say, asking not to be identified as they are not authorized to speak on the matter, Bloomberg reported.
The estimate compares with a revised FY19 market borrowing of Rs 6.34 lakh crore, people said.
For more live market updates, click here.
Budget 2019: Fiscal Deficit For FY20 Pegged At 3.4%
Indian equity benchmarks traded at day's high after the government pegs fiscal deficit at 3.4 percent for the next fiscal.
The S&P BSE Sensex Index rose as much as 0.7 percent to 36,506 and the NSE Nifty 50 Index rose as much as 0.6 percent to trade above 10,900.
Catch the live updates on January auto sales here.
GST Collections Cross Rs 1 Lakh Crore-Mark For December
- Made seizures worth Rs 50,000 crore in anti-black money moves
- Anti-black money measures have brought in revenues of Rs 1.3 lakh crore
- Benami properties of Rs 6,900 crore attached
- 3.38 lakh shell companies identified, directors penalised
- 1.6 lakh new taxpayers as result of note ban in FY18
- Illegal foreign property worth Rs 1,600 crore attached
The return verification, assessment and scrutiny of tax matters will be done anonymously within the next two years, Goyal announced, with an aim to curb corruption and tax evasion.
The total tax collection in the current fiscal stands at Rs 12 lakh crore, he said, while the taxpayer base has risen to 6.85 crore.
Nearly 99 percent of all income tax refunds were accepted last year.
In order to make the process more friendly, all refund requests will now be processed within 24 hours and refunds will be passed simultaneously.
Rahul Puri, managing director of Mukta Arts welcomed the government's move to extend single-window clearance to Indian filmmakers.
"Single-window clearance has been the industry's demand for a very long time. We welcome such a move as a lot of permissions are required currently and the process is very bureaucratic and time consuming," he said.
"If this move could be extended for multiplex licenses, it would be very beneficial to the industry."
- 34 crore Jan Dhan Bank accounts created in last five years.
- Mobile data consumption has grown 50x in last 5 years
- Cost of telecom data and voice calls in India lowest in the world
- Aim to create 1 lakh digital villages in next 5 years
- Solar power production has grown 10x in last 5 years
- Allocation to north eastern areas increased 21 percent to Rs 58,166 crore in FY20.
FM says the government has managed to harnessed the strength of the youth through self-employment schemes including the Mudra Yojana, Startup India and Standup India.
Under Mudra Yojana, 15.56 crore loans have been dispersed amounting to Rs 17.23 lakh crore, Goyal says.
Backdrop
The three-year-old scheme provides refinance for loans up to Rs 10 lakh given out by banks and non-bank lenders.
Loans worth Rs 2.54 lakh crore were classified as Mudra loans in 2017-18, according to the scheme’s annual report. This is an increase of 41 percent over the Rs 1.80 lakh crore of loans sanctioned in this category. For 2018-19, a target of Rs 3 lakh crore has been set. Refinance to commercial banks increased from Rs 1,886.73 crore in 2016-17 to Rs 4,405.73 crore in 2017-18, according to the annual report.
However, there are two concerns regarding this scheme. The first is that banks are reclassifying existing loans as Mudra loans, thereby not increasing the flow of credit. The second concern remains that of asset quality. However, so far, bad loan ratios have remained in check. According to the latest annual report, the non-performing assets ratio in the portfolio currently stands at 5.38 percent.
Budget 2019: Taking Stock Of Indian Railways, The Last Five Years
The government had expanded the ambit of the Ujjwala Yojana -- a scheme to safe guard the health of the women of the nation -- from 5 crore connections to 8 crore connections int he last union budget. Under this, the government has already completed 6 crore connections and expects the remaining 2 crore connections to come through by next year, Goyal said.
The Finance Minister's decision on fishery sector will have a great impact, Ramakanth Akula, CEO at waterbase said.
"At present farmers face a lot of issue due to natural calamities and competition from international markets. Lower interest rate will help the farmers and make them more competitive in the international market," Akula said.
Budget 2019: Government Announces Pension Scheme For Unorganised Sector Workers
India primarily remains a rural economy with two-thirds of its population and 70 percent of its workforce residing in rural areas. With growing urbanisation the number will come down but still remain over 50 percent by 2050, according to the government's own estimates.
The distress in India's rural areas is linked to the farm distress.
SBI research found that the agriculture defalter for 2018-19, according to the first advance GDP estimates, is at -0.1 percent. That is the lowest in 10 years indicating "continued distress (or low demand) in rural areas," it said.
"Rural sector continues to be plagued by declining prices and effective lack of marketing agricultural produce." The continued fall in food prices is also weighing down demand in rural India.
Budget 2019: Government Sets MGNREGA Spending At Rs 60,000 Crore
- Will add two lakh education seats with roll out of additional reservation.
- FY19 food subsidy spend was Rs 1.7 lakh crore.
- Constructed 1.53 crore houses so far.
- FY20 PM Gram Sadak Yojana spend seen at Rs 19,000 crore.
- FY19 budget gap at 3.4 percent of GDP versus 3.3 percent
- India attracted $239 billion FDI in last five years.
If we had not controlled inflation, our families would be spending 35-40 percent more than what they are spending today for basic necessities.”Finance Minister Piyush Goyal
I can proudly say that India is solidly back on growth track.Finance Minister Piyush Goyal
Lok Sabha Member Mallikarjun Kharge warned that the government will try to introduce populist schemes in the interim budget with general elections in mind, ANI reported.
The Congress leader said that "Budgets they've presented so far haven’t really benefited general public. Only ‘Jumlas’ will come out today. They've only four months when will they implement the schemes?"
Indian equity benchmarks held on to early gains. The Sensex is up 0.35 percent at 36,386 and the NSE Nifty 50 Index advanced 0.32 percent to 10,866.
Mid- and small-cap shares were witnessing buying interest as the S&P BSE MidCap Index and the S&P BSE SmallCap Index outperformed. The overall market breadth was positive as 1,100 shares were advancing while 800 were declining on the BSE.
Manufacturing PMI in India increased to 53.9 in January from 53.2 in December of 2018. Manufacturing PMI in India is reported by Markit Economics.
Catch the live updates on January auto sales here.
Here's what Saurabh Mukherjea of Marcellus expects from Budget:
- Expect government to announce disinvestment target of Rs 80,000 crore.
- Expect amount around half a percent of GDP to be announced for Universal Basic Income.
- Don't think finance minister has room to claw back Long Term Capital Gains Tax.
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Read the full story here
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Total expenditure—which includes revenue and capital expenditure by the government—is expected to be lower than last year’s estimates.
“We expect a cut in capital expenditure by Rs 50,000 crore and postponing Rs 30,000 crore of revenue expenditure to the next year,” SBI said, adding that total expenses are likely to come in at Rs 26.6 lakh crore for the current financial year. Axis expects a Rs 45,000 crore cut in total expenditure, mostly through capital expenditure.
BQExplains: How India Earns Its Revenue
The Narendra Modi government will present its last budget—a vote on account—tomorrow, highlighting at least its income and expense plan until a new government is formed, or at most some steps to relieve India’s farm distress.
Here are the key numbers to watch out for:
- Total receipts
- Capital expenditure
- Fiscal deficit
- Gross borrowing
- Divestment target
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