Expert opinions on Interim Budget 2019-20

Following are the opinions by experts on the Interim Budget 2019-20 presented by Finance Minister Piyush Goyal on Friday:

Joe Verghese, Managing Director, Colliers International India.
If the government is looking for a silver bullet in an election year, when the threat of "jobless growth" is rearing its head, injecting liquidity into the real estate/ construction industry, the biggest generator of jobs the last 25 years, is one of the most viable options. An election year interim budget is normally not something that the industry looks forward to as its agenda tends to be election focused (at the cost of industry). The industry is hoping that this year we are in for a pleasant surprise.

Shubhada Rao, Chief Economist, YES BANK
The Budget has addressed concerns of farmers and the salaried class by providing relief to small and marginal farmers up to 75 thousand crores and interest subvention up to 5% in the event of natural calamity and; secondly exempting income tax for income up to 5 lakhs. Both these are significantly consumption positive and augur well for overall tax collections in FY 20. While there is a marginal slippage in fiscal deficit target for FY 19, the approach towards consolidation has been diluted for FY20 on account of farmer relief. The net borrowing programme doesn't appear alarmingly high. Overall a good budget that delivered on expectations in an election year.

Sohinder Gill, Director General - Society of Manufacturers of Electric Vehicles (SMEV)
The mission of bringing an electric vehicle revolution to India by 2030 is a truly path-breaking and will surely provide much-needed impetus to the industry. The government's focus on the use of clean energy in the transportation sector would certainly help our country tackle the issue of climate change. We hope the government would soon announce a concrete plan of action with its time-bound implementation in order to fulfil its stated vision.

Ramesh Nair, CEO and Country Head, JLL India:
This is a progressive Budget that has the potential to usher the country into a new phase of development and growth. It is expected to boost the real estate sector and keep up the pace of development achieved in 2018. This budget is clearly focussed on both homebuyers and developers with unsold inventory, and addresses some of the key pain points of the sector. For affordable housing projects, the benefit under the provisions of Section 80IB-A (100% deduction on gains from these projects) has been extended for one more year, until 2020.
The tax relief on notional rent from unsold stock has been extended to two years. For buyers, no tax on notional rent on second self-occupied home, no TDS on rental income up to 2.4 lac per year and capital gain exemption under Section 54 of Income Tax Act to be available on two house properties, (up to Rs 2 cr) once in a lifetime, will prove to be a big impetus for the sector. Also, the strong signal of rationalization of GST in the near future also augers well for the sector. With these measures bearing fruit in the medium to longer term, we foresee a rise in housing demand in 2019.

Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking Limited:
The Budget-2019 has proved to be a Godly Budget for the middle class. This section has got more than they had even anticipated with block-buster tax reduction announcements. This can trigger consumption wave with increased demand for automobile, FMCG, housing and building materials. It's a great effort from Finance Minister, balancing prudence and populism.
"Similarly, the farm income scheme should help agri-associated businesses seeing renewed enthusiasm and revive rural demand.
Government factoring-in higher than anticipated borrowing figure during FY20 can make bond markets somewhat anxious. However, if RBI can surprise the markets with dovish tone in the upcoming RBI monetary policy, this can also be expected to be resolved.

Shachindra Nath, Promoter and Executive Chairman of U Gro Capital Ltd. on SME and MSME sector:
In the light of the elections, this is a budget with mass-appeal and yet the government has been cognizant of the fiscal deficit levels. The revised income tax slab and assured income schemes will put a lot of money in the hands of the Indian consumer, especially in rural areas, which should revive spending and thus give a fillip to the Indian industry especially the SME segment.

Sandeep Upadhyay, MD & CEO, Centrum Advisory Structure Ltd:
INFRASTRUCTURE: The sustained focus on core sectors especially in the North East (NE) states was one of the key highlights. Putting some of these NE states on the aerial and railways connectivity map was long overdue and comes as a huge relief for the people of NE states paving the way for their gradual economic evolution. While the highway sector has been lately struggling on attracting funding, the achievement of 27 Km per day is commendable given the overall financing constraints.
I believe government's exchequer will continue to be under strain given that most of the mega projects currently under implementation are under the government's balancesheet with the private players taking a back seat on the PPP and BOT projects. One was expecting to hear more about the plans to fund the gap in the infrastructure and other core sectors.
Goyal, also the ex-renewable energy minister, claims a "ten times" increase in the solar capacity was more of a report card statement for which the NDA government should be certainly commended. However it is noteworthy that the same has been achieved on a historically low base. I would closely watch for the implication of safeguard duty, rupee depreciation and lately cancellation of PPAs and solar bids.
BANKING: The reversal of PCA announced yesterday for three PSBs and perhaps more to come as covered in the interim budget speech was certainly much awaited and a welcome move. The Insolvency & Bankruptcy Code (IBC) has so far met with limited success. While the recovery so far has shown encouraging signals, however the timelines to resolve some of the larger cases and ambiguity around some of the contentious clauses of IBC still pose a big challenge in cleaning up NPAs. Success of IBC is expected to directly impact the overall credit growth and facets of Bond Market growth which otherwise remains subdued at the moment.

Vinod Nair, Head of Research, Geojit Financial Services Ltd:
The interim budget was watched by the market on a few important points such as sops to small farmers, incentives to the common man, and in the overall, will it be fiscal prudent? The outcome has been marginally better than expected in the market since it provides a good package considering the upcoming general election, while maintaining a rationality in the long-term. For the market it will provide a good signal in the short-term since the interim budget will not trouble the economic accountancy and populist agenda.

Rajeev Singh, Partner, Deloitte India:
Increased sourcing from MSME sector to 25% for government projects should help in job creation.

Pankaj Jain, MD at Realistic Realtors:
Income Tax rebate up to Rs 5 lakh per annum is a clear indicator of bringing more people under tax payers category happily and comfortably. Money circulation through bank and economy will have major positive impact due to this tax rebate. Housing under PMAY and increase of infrastructure development budget is a also very positive step towards real estate affordability and accessibility because these two initiatives would enable more people buying their homes in city as well as outskirts.
GST rate on real estate is still a pending but a very critical issue to be addressed. This is another very important matter for easing the real estate sector and encouraging the completion of under construction projects.

Rajesh Narain Gupta, Managing Partner, SNG & Partners:
It can be said to be a people-centric budget that seeks to address the rising distress in the agricultural sector. Focused mitigation measures such as the Pradhan Mantri Kisaan Samman Nidhi will help bolster the financial health of small farmers through direct income support. With key reform initiatives like recapitalization of PSBs and structured banking reforms, the budget remains steadfastly positioned on the path to creating a clean and transparent banking mechanism in the country.

Mahesh Singhi, Founder & MD, Singhi Advisors:
The government has rolled out a pro-populist agenda that broadly outlines its medium-term economic priorities, specifically focusing on improving rural/farmer incomes. This is a largely populist budget which continued to harp on the "farmers and individuals" rhetoric while attempting to address apprehensions on expected revenue shortfall, especially the GST collection which has not met expected targets. The government has thus resorted to traversing the path of electoral populism over fiscal discipline.

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