From doling out sops for the farm sector and providing some relief to the individual income-tax payers, here’s what leading brokerages expect from the budget
Interim Budget 2019: With barely a few days left for the NDA (National Democratic Alliance) government to present the Interim Budget 2019, most domestic and foreign brokerages expect the measures to have a populist undertone ahead of the general elections scheduled for April / May 2019. From doling out sops for the farm sector and providing some relief to the individual income-tax payers, here’s what leading brokerages expect.
CLSA
The pressure to further expand the farmer welfare programme ahead of the 2019 national elections is high for PM Modi. A possible announcement of a nationwide direct farmer support scheme is quite likely, or possibly even earlier. A Telangana-style scheme could cost ~ Rs1.2trn, further complicating fiscal maths, as it could be a recurring liability. The RBI’s possible large dividend might help just one time.
The GST-led tax revenue shortfall of 75-80bps of GDP is not reflected in the reduced government expenditure for FY19 due to off-balance-sheet funding, which is not a sustainable solution and will create its own problems later and distort the reported fiscal deficit for FY19…
Bank of America Merrill Lynch
We expect the Center to target a fiscal deficit of 3.5% of GDP in FY20, after ending FY19 at 3.7%, 40bp higher than target. This should be funded by running down the Center’s surplus with the RBI without additional issuance. While a pre-election Budget should ideally not propose new direct taxes, the finance minister should take steps to alleviate stress in rural India (metaphorically Bharat) via subvention or direct income transfer and for small industries via subvention…
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