Fitch Ratings on Thursday warned of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base.
Budget 2019: Finance Minister Piyush Goyal on Friday will present the interim Budget before the Parliament. This will be Modi government's sixth and final Budget. As Lok Sabha polls have been lined up this year, the interim budget will likely to be a populist one. The Modi government is likely to make an announcement on the minimum income support scheme for the poor. “The roll-out of income support as a core centrally sponsored scheme is a better option than debt waivers,” PTI reported the domestic agency India Ratings as saying.
Read: Expectations from Piyush Goyal
However, Fitch Ratings on Thursday warned of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base.
Below we have listed out what announcements could be made related to 7th pay commission, farmer's income and for sectors like real estate.
1. Expectations of Digital sector
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Expressing his concerns for the digital sector, Soumitra Gupta, CEO, Togofogo.com said to DNA, "2019 is a promising year in digital sectors with increasing internet consumption. However, we expect from the government of India to add investments in these sectors to increase consumers’ accessibility to digital mediums and enable deeper internet penetration in the country. We expect that with budget 2019, the government will introduce relaxed GST slabs for digital start-ups in order to propel the next level of growth of this thriving sector."
"Besides, the government must focus on e-commerce logistics setup nationally so that refurbished market or online delivery market can track down their audience in tier-4 cities and beyond to provide faster delivery services", he further added.
"The government should increase more verticals to digital payment options and should aim to increase its awareness to witness a gradual shift from COD to digital payments," Gupta said.
2. 7th pay commission
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Government employees have been demanding for long salary hike beyond the recommendations of the 7th Pay Commission. The budget is likely to address the fitment factor and minimum pay hike demand. The central government employees have been demanding a hike in the minimum pay scale to Rs 26,000 from the current Rs 18000 along with a fitment factor of 3.68 times from the present 2.57 times.
3. Insurance sector
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The government could allocate more budget to Aayushman Bharat scheme. Firms providing health insurance to employees could also expect some relief.
4. Tax exemption limit to be raised?
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The Narendra Modi government is expected to double the income tax exemption limit in the interim Budget, reports have said. This would make income tax-free till Rs 5 lakh per year, up from the present Rs 2.5 lakh exemption. The expected bonanza is being perceived as an effort to shore up the BJP's support with the middle class just months before the 2019 Lok Sabha election.
5. Television Industry
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"As per the industry report, over 10 crore households are still deprived of TVs. Keeping this in mind, in order to increase the penetration of LED Television in the country, we urge the government to further reduce GST for up-to 40 inches TVs to 5%. This move will certainly improve the consumer's sentiments as till 40 inch TVs are a mass product towards Digital India. In luxury television segment, we are expecting the GST for 43 inches to 55 inches TVs to drop to 18% from 28% , said Yogesh Bhatia, MD, Detel to DNA.
6. Smartphone industry
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Ashwin Bhandari, CEO, iVOOMi said to DNA, "We are looking forward to provisions by the government in the budget which will be in the interest of making Indian manufacturing facilities at par with global giants, which will tremendously benefit exports and increase exports from India manifold. Increase in exports will lead to India becoming a manufacturing hub of the world."
"We are hoping to see reservation of budgets to provide strategically located infrastructure support to small component manufacturers. This will further support the Make in India initiative, taking manufacturing units to the next level in terms of capabilities and growth. Releasing special funds for this will help Indian factories/manufacturing plants become the global manufacturers and India could be the manufacturing hub of the world in the next three years."
"It would be great to see the budget-making provisions for incentives for contract manufacturers (LCD panels, battery cells, mouldings, and the likes of it), to achieve comprehensive growth at a large scale, supporting the Indian factories in reaching the next level and becoming a global manufacturing hub," he added.
7. Real Estate Industry
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R K Arora, Chairman, Supertech Limited told DNA, "The Indian real estate sector is one of the most important for the economy, contributing as much as 6-7 per cent to the GDP in 2017 and is expected to contribute about 13 per cent by 2025. The government has been focussing much on the sector over the past few years to ensure that the target of housing for all by 2022, India’s 75th anniversary as an independent country. However, much needs to be done. While GST reduced the multiple taxes and complexities in real estate transactions, the stamp duty remains. This must be removed as is the case for most other industries."
"Another request we have is that the real estate sector be given industry status. The growth of the real estate sector is one that has a ripple effect on many other ancillary industries. The sector was one of the worst hit after demonetisation and has only just started to recover. The change in status make it easier for developers to raise funds at lower rates. The cost of capital is a major problem at this time and a reduced cost of capital would impact overall project costs and costs to buyers. We also hope that the government reduce the GST rate applicable to housing as that would be the ideal boost that is much needed by the industry", he added.
8. Agriculture sector
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In the previous Union Budget, the government's focus was on improving farm incomes and infrastructure. Hence, allocation to farm procurement and roads sector was increased by 21% and 16% respectively. Ministry-wise spending in the year also shows that the government's focus has been maintained on farmers, health, roads and rural infrastructure.
In the FY20 Union Budget, the focus on rural and farm incomes will be even higher as the government approaches election in a few months. In the last two years, various state governments have waived farm loans of Rs 2.6 trillion (1.4% of GDP).
