Budget 2019: Hopes Brimming - Splurge till you drop, says Piyush Goyal

'More money into the hands of more consumers', a consistent demand by the consumer goods companies has been finally met.

Finance minister Piyush Goyal dished out a host of schemes and tax sops for the rural consumers as well as the salaried class, thus leaving more disposable income in their hands.

A populist move, it comes as a much-awaited relief for the lower- and middle-class tax payers, unorganised sector workers and farmers.

Various steps including assured income support of Rs 6,000 annually (paid in three equal tranches) for small and marginal farmers, 50% hike in the minimum support price for 22 types of crops, 2-3% interest subvention scheme on loans for farmers doing animal husbandry and fisheries and interest subvention of 2-5% for all farmers if their harvest is washed out due to natural calamities, will go a long way in easing out rural distress.

Vivek Gambhir, managing director and chief executive officer, Godrej Consumer Products, described the budget as 'consumption first' one and said it will provide a much-needed thrust to growth in the FMCG sector.

"It re-emphasises the aam aadmi at the heart of the government's pro-growth, pro-reform agenda; maintaining the fiscal deficit, stimulating demand and building a sustainable growth platform. It is positive for FMCG; proactive efforts to drive demand and increase consumption, in rural and urban, should help improve growth. Focused efforts to relieve stress in the agrarian economy will help put more money in the hands of farmers," he said.

The lower-middle class consumers are major beneficiaries, with full income tax rebate for individuals having annual income of Rs 5 lakh.

This move is expected to leave additional money in the hands of over three crore tax assesses thereby boosting demand for consumer goods and services.

Calling it forward-looking, Sunil D'Souza, managing director, Whirlpool India, said the proposals are expected to increase liquidity in the hands of the consumer.

"Along with the recent reduction in goods and services tax (GST) on appliances, this anticipated increase in consumer spending can be a catalyst for higher demand in our sector," he said.

A pro-farmer and pro-middle class Budget, it brings more clarity on the government's path towards going digital, said Kumar Rajagopalan, CEO, Retailers Association of India. "More money in the hands of middle class will benefit retail as it will create a feeling of well-being, which is known to boost consumption. It's a feel-good budget that will lead to positive sentiments all around thus creating better retail conditions in the country," he said.

Overall, the Budget proposals have given a big boost to the urban and rural incomes by enhancing purchasing power of consumers in the rural, semi- and urban markets. Industry experts see this having positive repercussions in terms of additional spending for sectors like FMCG, consumer durable goods and automobiles. "Both rural and urban consumption will get a boost and will have positive implications for sectors like tractors, hybrid seeds, agri inputs, two wheelers, consumer goods etc," said Amarjeet Maurya, assistant vice president - mid caps, Angel Broking.

Akhil Chandna, director, Grant Thornton India LLP, said the Budget was positioned as a transformational vehicle. "Besides the farm sector, it clearly aimed at targeting the distressed middle class taxpayers and boosting their confidence. Providing a full tax rebate without increasing slab rates, to three crore tax payers comprising self-employed, small business and salaried class is a master stroke by the government. Also, raising the limit of standard deduction is an added boost and ensures more net-in-hand income for this class," said Chandna.