Interim Budget 2019: What's in store for investors, taxpayers, economy?
Interim Budget 2019: What’s in store for investors, taxpayers, economy?
ith barely a few days left for the NDA (National Democratic Alliance) government to present the Interim-Budget 2019, most domestic and foreign brokerages expect the measures to have a populist undertone ahead of the general elections scheduled for April / May 2019.
From doling out sops for the farm sector and providing some relief to the individual income-tax payers, here’s what leading brokerages expect.
CLSA
The pressure to further expand the farmer welfare programme ahead of the 2019 national elections is high for PM Modi. A possible announcement of a nationwide direct farmer support scheme is quite likely, or possibly even earlier. A Telangana-style scheme could cost ~ Rs1.2trn, further complicating fiscal maths, as it could be a recurring liability. The RBI’s possible large dividend might help just one time.
The GST-led tax revenue shortfall of 75-80bps of GDP is not reflected in the reduced government expenditure for FY19 due to off-balance-sheet funding, which is not a sustainable solution and will create its own problems later and distort the reported Fiscal Deficit for FY19.
We expect the ‘real’ government expenditure growth to slow down. The impact on capex will be even greater if the farmer support scheme is implemented. ITC should see some relief rally, as the budget is unlikely to tinker with tobacco taxation.
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