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    Budget 2019: Not so populist as expected, say brokerages

    Budget 2019: Not so populist as expected, say brokerages

    Budget 2019: Not so populist as expected, say brokerages
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    By CNBC-TV18  IST (Updated)

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    Interim finance minister Piyush Goyal presented the Narendra Modi government's last budget for this tenure before the general elections due in few months

    Interim finance minister Piyush Goyal presented the Narendra Modi government's last budget for this tenure before the general elections due in few months.
    The government has proposed a tax rebate of Rs 12,500 for individuals payers earning taxable income up to Rs 5 lakh. For small and marginal farmers, the government has proposed “Pradhan Mantri Kisan Samman Nidhi Yojana”, under which, the government would give direct income support of Rs 6,000 per annum to farmers having land up to 2 hectares.
    Brokerages termed the Budget as populist ahead of elections.
    Citi
    • The scale of the (populist) programs was at the lower end of our expectations, enabling the government to stay close to fiscal targets
    • The fiscal deficit for FY19 slips marginally to 3.4% of GDP but meets the FRBM norm of 0.1% of GDP reduction
    • No further consolidation in the FY20 fiscal deficit target belies expectations of FRBM adherence
    • Morgan Stanley
      • The budget provides further impetus to consumption via cash transfers to low and middle income groups
      • Fiscal slippage means greater vulnerability to oil prices somewhat offset by a low starting point of consumer price inflation
      • Greater tax transparency in the offing with a complete electronic system rolling out
      • Credit Suisse
        • Non-market financing of deficit and extra-budgetary spending though are concerns
        • Corporate tax collections in FY19RE higher than budgeted; 13% growth in FY20 reasonable
        • Personal income tax collection growth at 17% despite the Rs200bn tax cut implies assumption of the buoyancy seen in the last few years
        • 18% growth in GST collections may be 3-4% higher than reasonable, but with improved compliance it should be possible
        • Farm income transfer could boost spending and support FMCG demand. Given the nature of transfers, inflationary impact should be lower.
        • Capital Economics
          • A clear bid in the interim Budget today to shore up popular support ahead of the general election with proposals to boost rural incomes and cut income tax
          • Asset sales are set to fall well short of target this year and, though no target was set for FY19/20, the fiscal maths dictate that it will be another unrealistically high number
          • The guaranteed income proposal could fall by the wayside or at least be pared back, given its large fiscal costs
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