HomeEconomy NewsExpectations for India's 2019-20 interim budget

Expectations for India's 2019-20 interim budget

After a string of recent setbacks in key state elections for Modi's Bharatiya Janata Party (BJP), the government is expected to woo rural and urban middle-class voters via farm relief measures and tax cuts.

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By Reuters February 1, 2019, 8:21:47 AM IST (Updated)

Expectations for India's 2019-20 interim budget
The government will unveil its budget for the 2018-19 fiscal year on Friday, with investors expecting increased investment in areas such as agriculture, as Prime Minister Narendra Modi tries to woo voters ahead of general elections to be held by May.


After a string of recent setbacks in key state elections for Modi's Bharatiya Janata Party (BJP), the government is expected to woo rural and urban middle-class voters via farm relief measures and tax cuts.

The government is expected to project economic growth of around 7.5 percent for the next financial year, while expanding capital spending on railways, roads and ports by 7-8 percent.

Below is a list of some of the items expected in the budget, based on published media reports.

Agriculture

  • Farm relief package itself could run to at least Rs 1 lakh crore ($14.04 billion).

  • Set to earmark about Rs 1,80,000 crore for food subsidies in the fiscal year.

  • Expected to waive premium for taking insurance policy for food crops.

  • Proposal for waiving interest on crop loans for farmers who pay on time.


Divestment

  • Target of about $11 billion from state asset sales in FY 2019-20.

  • Potential stake sales via IPOs include Telecommunications Consultants India, Indian Railways' subsidiaries IRCTC, RailTel Corp India and National Seeds Corp.


Metals

  • Gold - Speculation around a duty cut.


Health

  • Budget allocation for health is likely to increase by 5 percent from a year ago.


Taxes

  • An anticipated corporate tax rate cut to 25 percent from 30 percent may be put on hold until after the elections.

  • Higher tax exemptions for the middle class and for small businesses anticipated.


Banks

  • Discount of 2 percentage points on loans for businesses with annual sales of less than Rs 5 crore; government to compensate banks for the costs.

  • Rs 4,000 crore capital infusion for public-sector general insurers.


Autos

  • Reduction of goods and services tax (GST) on electric vehicles and batteries.


IT/Telecom

  • Better digital infrastructure in rural areas.

  • Abolition of the angel tax to boost start-ups.

  • Exemption from GST for spectrum and licence fee payouts, reduction in spectrum fees and cuts in import duty on telecom equipment (currently at 20 percent).