How Budget 2019 would benefit banks, NBFCs and consumer sectors

In its attempt to woo the aam aadmi ahead of the 2019 Lok Sabha elections, the Narendra Modi government has extended more sops and benefits to farmers, middle- and low-income groups in the 2019 Interim Budget.

Finance Minister Piyush Goyal announced numerous schemes and tax benefits for farmers and salaried individuals, and gave an impetus to the consumption space that drives the economy during the election period.

Keeping the fiscal discipline on his radar, Goyal announced two key sops for the burgeoning middle class citizens, along with some major benefits for farmers.

For mid-income groups, the FM has announced full tax rebate for individuals with net taxable income up to Rs 5 lakh along with raising standard deduction limit for salaried employees.

"Both measures will ensure increased savings and eventually increased spending," Ankur Maheshwari, CEO Equirus Wealth Management told Moneycontrol.

In the second key announcement related to farmers -- an important vote bank -- the FM announced the PM Kisan Yojana, under which farm loan waiver has been raised to 8 percent.

There are other schemes that benefited banks, NBFCs and consumer sectors --  highlighted below by DHFL Pramerica MF:

Banking

The government has spent Rs 2.6 lakh crore for re-capitalisation of PSU banks. This enabled banks to recognise stressed assets, make provisions, create capital buffers and strengthen balance sheets. Improved health of PSU banks to facilitate increased lending to high grade corporates, mortgages and the MSME sectors.

The government also increased interest rate subvention from 2 percent to 5 percent depending upon timely payment of interest and principal for all farmers affected be natural calamities. A further 2 percent interest subvention for farmers involved in animal husbandary and fisheries has been provided.

NBFCs

Exemption of income tax for second self occupied house and tax holiday on notional rent on unsold real estate increased from one year to two years, which will ease the pressure on real estate in turn helping NBFCs that were dealing with asset quality and growth issues.

Consumer Sector (including FMCG)

The FM announced the PM Kisan Samman Nidhi package, under which farmers owning up to two hectares of land will be provided Rs 6,000 per annum.

Under the mega pension scheme, Rs 3,000 per month will be paid to those in the unorganised sector post retirement.