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Populous budget gives more than expected

Benefits for rural, social and infra sectors


It is not surprising that the Union Budget FY19 has turned out to be populous, said Dr. Arun Singh, Lead Economist, Dun & Bradstreet – India.

“The Union Budget FY19 has given more than what was initially expected as far as rural, social and infrastructure sector is concerned,” said Singh.

Increased allocations and measures announced towards agriculture sector, rural infrastructure and social sector including health, if implemented timely and fully, have the potential to kick-start growth momentum in the economy, he believes.

This was one of the most appropriate ways to provide some relief to these sectors which were highly impacted by two structural reforms i.e. demonetization and Goods and Services Tax (GST) implementation.

“This would also address agrarian crisis and unemployment scenario to some extent,” added Singh.

While the announcement to increase the minimum support price to 1.5 times of production costs is a good move towards increasing farm income, this will have some repercussion on the overall inflation rate going forward, he cautioned.

“However, we don’t see a scope for an RBI rate cut. Further, deviation from the path of fiscal consolidation was widely expected and much warranted given slowdown in the investment activity.

“In addition, lowering of corporate tax, and measures to improve the capital and credit availability for MSMEs, are steps are encouraging steps,” added Singh.

Key highlights for investors and businesses:

Surcharge of 10% on income above Rs.50 lakh but less than Rs.1 cr, 15% on income above Rs1 cr to continue;

Economic growth pegged at 7.2-7.5% for H2 FY18;

Indian economy size US$2.5 trillion; 7th largest in world;

Fiscal Deficit for FY’19 estimated at 3.3% of GDP;

Govt’s market borrowing estimated at Rs 4.07 lakh crore in FY’19 versus Rs 4.79 lakh crore estimated in 2017-18;

Rs.2,000 crore fund for developing and upgrading agri marketing infra in 22,000 Grameen Agri Markets and 585 APMCs;

Allocation for food processing ministry doubled from Rs.715 crore in RE FY’18 to Rs.1,400 crore in BE FY’19;

Agriculture credit disbursal target increased to Rs.11 lakh crore from Rs.10 lakh crore in 2017-18;

Divestment target for FY’19 at Rs.80,000 crore;

Finance Ministry to leverage India Infrastructure Finance Corporation to help finance major infrastructure projects;

Outlay of Rs.7,148 crore for textiles sector in 2018-19;

Redevelopment of 600 major railway stations being taken up;

Suburban network of 160-km in Mumbai at an estimated cost of Rs.17,000 crore being planned;

Plans to expand airport capacity more than 5 times to handle a billion trips a year;

Security Industry Board of India to consider mandating, beginning with large firms, to meet about 1/4th of their financing needs from bond market;

Allocation on Digital India scheme doubled to Rs.3,073 crore;

Rs.10,000 crore for creation and augmentation of telecom infra;

Proposed expenditure on infra pegged at Rs.5.97 lakh crore, up from Rs.4.94 lakh crore in FY’18;

Bank recapitalisation to pave way for PSBs to lend additional credit of Rs5 lakh crore;

Corporate tax reduced to 25% for firms with turnover of Rs.250 cr in 2016-17;

Govt introduces long-term capital gains on equity market; long-term capital gains over Rs.100,000 to be taxed at 10%;

Defence outlay raised to Rs.2.82 lakh crore in 2018-19 from Rs.2.67 lakh crore in current year.

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