Budget 2019 review: D-Street lauds govt's vision, analysts say makes economic sense

D-Street voices termed the Interim Budget to be a middle-class-friendly, apart from addressing the issues for rural India.

Finance Minister Piyush Goyal weathered a boisterous Opposition to present an Interim Budget on February 1 that sought to balance fiscal discipline with welfare necessities in an election year, as he announced a direct cash transfer plan for distressed farmers and a mega pension plan for unorganised sector workers.

The budget, the last before the country votes for a new Lok Sabha in April-May, also broke the convention of not announcing major income tax changes when governments are in transition.

Goyal promised to put more money in the hands of the salaried and middle class by announcing full tax rebate for people earning up to Rs 5 lakh.

He also raised the “standard deduction” – a flat amount on which taxes are not paid—to Rs 50,000 from Rs 40,000 annually. He also raised the income tax exemption on bank deposit interests to Rs 40,000 from Rs 10,000 currently.

There will also be no tax deducted at source on house rent up to Rs 2.4 lakh a year, as capital gains exemption on houses has been raised to Rs 2 crore.

“Our aim is to reduce the tax burden on the middle class”, Goyal said.

He presented a stirring account of the Modi government’s economic and reform policies, generously peppering his 100-minute speech with details of signature initiatives such as Ayushman Bharat, Pradhan Mantri Jan Ausadhi Yojana, Make in India, Jan Dhan Scheme, Start-Up India, MUDRA and the Insolvency and Bankruptcy Code (IBC).

Here is how the Street reacted to Interim Budget:

Suraj Malik, Partner -Transaction Tax/ Tax & Regulatory Services, BDO

An interim budget by an interim FM still with a clear focus on long-term fundamentals along with targeted proposals crucial to address the current economic, political and social situation. The interim budget focused on inclusive development and tax concessions. Policy announcements for agriculture and allied activities, rural communities and welfare of the workmen is outlining the government’s vision statement for the next term.

Ashok Varma, Leader – Social Sector at PwC India.

Pradhan Mantri Shramyogi Man Dhan Yojana seems to be an extension of the existing Atal Pension Yojana(APY). While APY was meant for workers in the unorganized sector, the new scheme includes marginal wage earners from the organised sector as well. Another difference is the upper age limit of 60 years in the new scheme as against 40 years in APY. It is a welcome move and would further provide social security to a larger number of marginal wage earners in the country. Being contributory and designed in line with NPS(National pension scheme), this also makes economic sense.

Ajay Kakra, Leader – Food and Agriculture, PwC India

The structural income support providing direct benefit transfer to small and marginal farmers is in the right direction. Around 72 percent of farmers are in this category and are likely to increase to 90 percent by 2025. The support can be helpful to protect this segment from market and price fluctuation and absorb the inflationary cost increments.

Ajay Bodke, CEO, Prabhudas Lilladher PMS

A bold and path-breaking Budget delivered by the Modi government in its final year. The government has eschewed populist impulses in an election year and has admirably arrested the slippage in fiscal deficit to just 3.4% of GDP for FY19.

The Budget provides a massive boost to the primary engine of growth i.e. domestic consumption through income tax sops for nearly 30 million low-income taxpayers and 120 million marginal farmers. This would go down in history as India's seminal march towards providing assistance to the economically disadvantaged groups.

Equity markets would rejoice boost provided to sectors in domestic consumption like automobiles, consumer staples and durables, real estate, building materials, home improvement and retail-focussed banks and financials, etc.