Budget 2019: After FM Nirmala Sitharaman presented the Union Budget for FY2019-20 earlier this afternoon, Motilal Oswal noted noted that the Narendra Modi-led government has laid emphasis on the principle of inclusive growth and meeting the medium & long term objectives.
Budget 2019: After FM Nirmala Sitharaman presented the Union Budget for FY2019-20 earlier this afternoon, Motilal Oswal noted noted that the Narendra Modi-led government has laid emphasis on the principle of inclusive growth and meeting the medium & long term objectives. “As per my reading of the things, budget has given priority to agriculture, MSME, NBFC, infrastructure and affordable housing. Reviving business confidence, private capex recovery, manufacturing, have got lower attention,” Motilal Oswal, Chairman & MD, Motilal Oswal Financial Serivces Ltd said. Even as expectations were rife that the government would look to alleviate concerns in the financial market, the Union Budget has tried to provide a boost to the NBFC space reeling under stress. Motilal Oswal said that the provision of Rs 70,000 crore for for PSU Bank recapitalization comes as a welcome step.
“The government would provide a one-time six month partial credit guarantee (first loss of up to 10%) to public sector banks to buy pooled assets of sound NBFCs amounting to Rs1 lakh crore during the current financial year. This would help NBFCs that are fundamentally sound in getting funding from banks,” he added.
Stock market may correct, opportunity to invest
The stock markets were looking forward for a boost to growth, given the ongoing economic slowdown. Motilal Oswal explained that there are two ways of pushing growth. “One is by bringing more money into government channel by extra taxes and then spending the same to infuse that money in the economy and other is leaving more money in the hands of people to bolster consumerism; Government has chosen first over the later,” he explained. Accordong to the expert, the markets will trade little weak in the near future till, government does not show the road map of growth and execution of the same. He added that in case of a correction, there will be an opportunity to increase equity exposure as long term prospects look promising.
Housing sector strengthening
Ahead of the Budget, many experts had said that the housing sector, going though stress, needed more regulatory supervision. “The National Housing Board (NHB), besides being the refinancer and the lender was also the regulator of the housing finance sector which was somewhat conflicting,” explained Motilal Oswal, adding that the move to return the regulatory authority over HFCs from the NHB to the RBI would help in strengthening of the sector and bringing them at par with the others in the financial industry.
Budget to set economy on growth path
In his assessment, the Union Budget has set the ground for the government to execute its reforms over the next five years. While the announcements have been on the macro level, one needs to see the granularity of these proposals to understand how it would be implemented and impact the economy in coming days, he noted. “Overall, we believe that the budget would set the economy back on the growth,” said the firm.