Budget 2019: The sops-loaded Interim Budget, businesses said, are potential game changers for the economy, consumer spending, and economic growth. Finance Minister Piyush Goyal announced a slew of populist measures including tax exemption for income up to Rs 5 lakh per annum, which will leave consumers with more disposable income at hand and spur growth.
The Rs 6,000 per year income support to farmers with less than 2 hectares of land will also lead to more rural spending and augment rural growth, experts said, adding that even as the allocation is “too little, too late”, it is a welcome start.
“The short-term impact of the Budget would strengthen growth by augmenting disposable incomes in the hands of farmers and middle-income groups. This should add to private final consumption expenditure and provide demand side push to growth,” DK Srivastava, chief policy advisor, EY India said.
Moreover, tax sops to incentivise the purchase of the second home is also positive for the real-estate sector, which has been distressed in the last few years. “Amongst the notable announcements for the real estate sector, the decision to eliminate the tax on notional rent on the second self-occupied house is a welcome move. This will prep up demand for second homes substantially,” said Surendra Hiranandani, Founder & Director, House of Hiranandani.
With the Budget being seen as a big positive for consumption expenditure, demand, and growth, the question over investment remains. The latest data revision of the economic growth showed that investment recovery started in 2017-18 but mainly due to government spending. The Gross Capital Formation surged to 32.3% for 2017-18 from 30.9% in 2016-17.
“Given the nature of the budget, it is understandable there is no mention of private participation in infrastructure building. While it is important for the economy to have a significant role for the private sector in this sector, that is being left to the incoming government,” Kumar, Partner, Deloitte India, said.