Union Budget 2019 India: Ahead of the Narendra Modi 2.0 government's first Budget 2019, 12 out of 15 experts are of the view that GDP growth will be a top priority to tide over economic challenges.
Union Budget 2019: India’s GDP growth hit a 5-year low of 5.8% in the fourth quarter of FY19 – a fact that led to India losing its tag of being the world’s fastest growing economy to China. Adding to the woes of the newly elected Modi government is employment data, with unemployment rate touching an over 45-year high! With this domestic economic backdrop and growing external sector challenges, a majority of economists and experts surveyed by Financial Express Online feel that the Budget 2019 will focus on providing GDP growth an impetus.
Ahead of the Narendra Modi 2.0 government’s first Budget 2019, 12 out of 15 experts are of the view that GDP growth will be a top priority to tide over trade challenges and also drive a consumption-led growth. While two economists believe the government has limited fiscal room, a third economist feels that GDP growth will be the biggest factor guiding Budget despite the lack of resources in hand.
Budget 2019: GDP growth to be the top agenda for FM Nirmala Sitharaman
According to Bidisha Ganguly, Chief Economist, CII, “The ruling party has just returned with a large mandate and are therefore keen for the economy to show signs of higher growth.” “Measures will be taken that are supportive of growth, though not at the cost of breaching fiscal stability,” she told Financial Express Online. A big lending firm, that participated anonymously in the Pre-Budget 2019 Survey credits the Modi government for disruptionist reforms. “We think a lot of reforms and disruptions for good have been done in the past couple of years and the benefits should start flowing in the next year or two,” it says.
Roads, ports, rural supply chain and cold chain infrastructure, MSME related allocations will bag greater capital outlays, opines Ranen Banerjee, Partner and Leader Public Finance and Economist, PwC.
Vikas Vasal, National Leader – Tax, Grant Thornton in India is of the view that Budget 2019 may provide direction on some bold policy initiatives to stimulate growth. “Budget will provide necessary impetus to investment and job creation. More than tax rate cuts, the need is to provide re-assurance to the investors and businesses that India is on the right growth trajectory and will take necessary steps – through policy and otherwise to ensure that economy continues to grow consistently,” he said.
Highlighting the fact that the Indian economy is facing multiple headwinds, Dr. Arun Singh, Lead Economist, Dun & Bradstreet India says, “It has been few months since interim budget announced. Multiple challenges have emerged as a threat for recovery.” The leading economist expects Budget 2019 to look at bumping up the GDP growth to counter these challenges.
Agrees Sanjeev Hota, Head of Research, Sharekhan who tells Financial Express Online that Budget 2019 should support RBI’s monetary efforts. “The Reserve Bank of India has already moved ahead by changing its policy stance and taking measures to address liquidity issues to support the economy. The government is expected to support the monetary efforts by providing a fiscal stimulus and other bold remedial measures,” Sanjeev Hota says. However, Hota adds that the fiscal room to provide a stimulus could be limited given weak indirect tax collections and the social schemes announced already to ease rural stress.
Madan Sabnavis of CARE Ratings and Rupa Rege-Nitsure of L&T Finance Holdings also said that the Modi government has limited fiscal room to provide the needed stimulus to GDP growth. “There is not much scope to go beyond the Interim Budget,” said Sabnavis.
Sandeep Raina, Associate Director, Edelweiss Professional Investor Research concurs that the Modi government does not have enough money. “They will put in incremental money. The first few Budgets focused on growth, but the last two were more populist. The expectation is that the growth focus will return,” Sandeep Raina concludes.