The Interim Budget announced by the Finance Minister had two major highlights. One was overall relief to the farmers and the middle class through a farmer income support package (Rs 6,000 a year for nearly 12 crore farmers) and income tax rebate for low income individuals. The second highlight was fiscal prudence, maintaining the deficit at 3.4 per cent, a tad higher but very much within permissible limits. These were on expected lines given the elections round the corner.
The farmer income support package's first tranche of cash disbursement (one-third of the total) will happen before the upcoming general elections and boost sentiments.
Income tax rebate (zero per cent tax on incomes) for low income individuals extended from Rs 250,000 to Rs 500,000. Again, a populist measure should help low ticket consumption. This coupled with farmer sops should be a positive for consumer staples, two-wheelers and small ticket consumer discretionary items.
Several measures were announced to prop up the real estate sector. While the measures may be small and incremental, it gives a message that the government is looking at the sector as a tool to prop up the economy. This is a positive for property developers, housing finance companies and cement manufacturers.
Gross borrowing will stand at Rs 7.60 lakh crore for FY20 (market expectations of between Rs 6.25 to 6.5 lakh crore), according to the budget document which includes a buyback of Rs 50,000 crore. In comparison, the revised estimate for FY19 is Rs 6.34 lakh crore. While the fiscal deficit for FY19 at 3.4 per cent GDP (10 bps higher than the budgeted estimates) and the target for FY20 is fixed at 3.4 per cent thus, the government is not letting go of the fiscal prudence, at least optically.
Among the announcements was a 10-point strategy to drive the economy's growth over the next decade.
* Building physical and social infrastructure for a $10-trillion economy and providing ease of living.
* Digital India reaching every sector of the economy.
* Making India a pollution free nation.
* Generating massive employment built upon the 'Make In India' programme to develop grass roots level clusters.
* Cleaning rivers.
* Powering India's coastline growth through the development of ports and sea-freight industry.
* Developing a space programme, named Gaganyaan. India has become the launchpad for satellites of the world.
* Making India self-sufficient in food and exporting to the world, while producing food in the most organic ways.
* Aiming at a healthy society and environment of health assurance. To work towards a distress-free health and wellness system.
* Minimum government, maximum governance