Union Budget 2019: Given the slowdown in the economy and the possibility of oil prices moving north over the next few months on the back of likely supply cuts by Organization of the Petroleum Exporting Countries (OPEC), market experts expect the upcoming Union Budget to focus on reviving growth and yet maintain fiscal prudence.

That apart, re-capitalisation of banks is also a key monitorable. The government, they say, is likely to continue with the off-budget route for carrying out infra-related spending.

“We believe that the government will focus on maintaining continuity in policy and spending on schemes allocated per the interim budget. As such, we maintain our fiscal deficit estimate at 3.5 per cent of GDP (3.4 per cent of GDP as per the interim budget), since the government has introduced the farmer income support scheme and also recently increased its scope,” wrote analysts at Morgan Stanley in a recent co-authored report led by Ridham Desai, their India equity strategist. Read Complete Article

Budget 2019: The upcoming Budget may hike the tax exemption limit for individuals from the current Rs 2.5 lakh and introduce a higher 40 per cent tax on those with income above Rs 10 crore, a KPMG survey said.

The pre-Budget survey 2019-20 conducted by KPMG (India) included responses from 226 respondents spanning across industries.

A whopping 74 per cent of the respondents felt that exemption threshold of personal income tax would be hiked from Rs 2.5 lakh, while 58 per cent said the government would consider a new 40 per cent tax slab for the ‘super rich’ — those earning above Rs 10 crore.

While only 13 per cent of respondents feel that inheritance tax would be brought back, 10 per cent felt there are chances of re-introduction of wealth tax/estate duty, the survey said.

To boost housing demand, 65 per cent of respondents felt the Budget may increase the tax deduction limit for interest on housing loan for self-occupied properties from the present Rs 2 lakh.

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Budget 2019:Fintech firms and start-ups expect the government to usher in a new set of reforms in the upcoming full Budget for the current fiscal and hope for tax relief, funding access, and further push to digital economy.

It come at a time when the consumption demand is not growing fast enough, investment is tapering and exports are falling.

Finance Minister Nirmala Sitharaman will unveil the full budget 2019-20 on July 5.

The interim budget was presented on February 1, as the general elections were due in April and May to form the new government.

Loyalty programme firm PAYBACK Chief Executive Officer Gautam Kaushik said Prime Minister Narendra Modi’s second term with an even bigger majority provides an opportunity to be decisive on the policy front.

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Union Budget 2019: The finance ministry has told the chief executives of all public sector banks (PSBs) to review credit facilities made available to micro, small and medium enterprises (MSMEs) and take ‘corrective’ measures to ensure the firms get adequate funds.

The finance ministry has told the PSB chief executives in an official communication to assign a chief general manager, or a general manager-level officer to “do an in-depth analysis of the progress made and issues in availability of credit, still being faced by the MSMEs”.

While taking “corrective actions” and doing the analysis, nodal general managers are supposed to submit details to the finance ministry of MSMEs taking credit from banks, non-performing MSME accounts, MSME accounts restructured following to the Reserve Bank of India’s (RBI’s) January scheme and the MSMEs still uncovered by it, among others.

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Union Budget 2019: Finance Minister Nirmala Sitharaman is set to present the Budget 2019 on July 5. This will be the first Budget of the Modi government after winning the Lok Sabha elections.

Union Budget is an annual financial statement of estimated receipts and expenditures of the Government of India. Under Article 112 of the Constitution of India, the central government is constitutionally bound to lay down the ‘annual financial report’ of the country. Budget document details how much money the Union government expects to raise in the coming financial year, and how and where it intends to spend that money.

The Budget is prepared by the Finance Ministry in consultation with other ministries. Officials from the ministry also hold talks with the private sector, non-governmental organisations and other stakeholders.

Union Budget history

Union Budget 2019: The real estate sector is looking to the FY20 Union Budget, which will be announced on July 5, to help it recover from its liquidity woes. Meanwhile, homebuyers are also hoping for announcements that would ease their hardships. In 2017, real estate contributed about 6-7 per cent to India’s gross domestic product (GDP). Further, the sector is expected to contribute about 13 per cent to the country’s GDP by 2025 and is seen becoming the third largest globally at around $1 trillion by 2030, according to a 2018 KPMG report. It was worth $120 billion in 2017. Budget announcements that give a boost to the real estate sector could provide a positive push to the slowing economy, as well as create more jobs.

ALSO READ: Big listed real estate companies drive profits home in a dull market

Solving the liquidity crisis

The real estate sector is hopeful the government will resolve the liquidity crisis it is facing. Bhutani Group CEO Ashish Bhutani says, “A vital reduction in interest rates will spur a drastic improvement in the existing liquidity crisis and will ensure the money flow in banks and NBFCs.”

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Union Budget 2019: India’s economy showed signs of fragility in May after April’s uptick, suggesting a sustained recovery needs a fiscal stimulus from newly re-elected Prime Minister Narendra Modi’s government.

Overall activity from eight high-frequency indicators compiled by Bloomberg News show the economy lacked momentum, with the dot remaining unchanged from a month ago. A renewed tightness in liquidity conditions kept business activity subdued. The dashboard is a measure of “animal spirits,” a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action.

As gross domestic product growth slowed to a five-year low of 5.8% in the first quarter of 2019, the Reserve Bank of India this month did its part to support the economy by lowering interest rates for a third time and switching to an accommodative stance. Further, analysts expect the new Modi government’s first budget on July 5 to tweak fiscal levers to give a boost to the economy and get it back on a faster growth track.

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Budget 2019: The Federation of All India Farmer Associations (FAIFA) has urged Finance Minister Nirmala Sitharaman to correct an error in cigarette taxation under the new tax regime, which did not account for the cascading effect on excise duty that existed in the pre-GST system.

FAIFA is a non-profit organisation that represents the cause of farmers and farm workers of commercial crops across the states of Andhra Pradesh, Telangana, Karnataka and Gujarat.

In a letter written to the Finance Minister, which has also been submitted to various concerned Ministries including the PMO, Ministry of Health and Family Welfare, Ministry of Agriculture, Ministry of Commerce and Industry, Ministry of Labour, the association has highlighted that error in cigarette taxation has inadvertently increased compensation cess rates that has resulted in additional taxes of around 13 per cent above the pre-GST levels.

“Any additional burden caused by the increase in compensation cess rates will put further pressure on the livelihood of Indian tobacco farmers. As observed in the past that increase in taxes have resulted in the inflow of huge quantities of illicit cigarettes in the market,” the FAIFA letter to Sitharaman said.

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Union Budget 2019: Transportation infrastructure and allied services are critical growth engines for propelling India’s rise as an economic superpower. While the public sector has played a dominant role in investing in infrastructure creation, the government will need increased private sector participation to supplement the rapidly growing industrial demand for a modern and robust transportation and logistics network at par with developed countries. The infrastructure sector was one of the major focus areas in the FY19 budget and saw massive spending on roads, railways, water, irrigation, and urban infrastructure. With all eyes on the upcoming Union Budget, the Government should focus on not only allocation of funds, but also on setting up a road map for clearly outlining the private and government sectors’ role in infrastructure creation and operations over the next year. Some interventions which may be considered by the Government for boosting the transportation and logistics sector in the country are proposed below:

Railways: With elimination of level crossings and other measures, the Railways’ track record of safety improved last year. However, there is still a long way to go for Indian Railways. Replacing walking inspection with automated inspections, upgradation of track management system into a dynamic asset maintenance and management system, improved mechanisation of track maintenance organisation across zones and greater use of RCM/CBM and IoT for real time monitoring and predictive maintenance of assets are a few steps,which would go a long way in ensuring safety.

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