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Budget 2019: Here are the financial services industry bigwigs’ expectations

Money Control, Jul 5, 2019

The budget could further the agenda of building a new India and is expected to open the doors of opportunities to investors in financial markets across asset classes.

Union Budget 2019 is expected to set the tone for the Narendra Modi government 2.0 on July 5. Market participants will listen keenly to the announcements of the Finance Minister Nirmala Sitharaman as she presents the Union Budget for 2019. The interim budget presented on February 1 by the then Finance Minister Piyush Goyal hinted at continuation of the reforms agenda. The re-election of National Democratic Alliance in the Loksabha election with clear majority gives a clear path to the Narendra Modi-led government to act on the opportunity by accelerating the reforms process.

The budget should further the agenda of building a new India and is expected to open the doors of opportunity to investors in financial markets across asset classes. There is a wide belief that government must take some firm action to accelerate the economic growth and the fruits of economic development should be enjoyed by all strata of the society. No wonder, many are waiting for the Union Budget to see if their wishes would be fulfilled. Here are some of the wish lists from Union Budget 2019.

Neil Parag Parikh, Chairman and CEO,PPFAS Mutual Fund.

Though the upcoming Union Budget may seem like a needless diversion from the ongoing Cricket World Cup for some, to many others it is still an event to be tracked closely and debated vigorously.

The current one, to be announced by a new Finance Minister holds out the hope that the dovish stance on monetary policy will be supplemented by a fiscal tailwind. The recent admittance of an economic slowdown and lack of job creation, in certain quarters have further bolstered this hope.

But are such expectations realistic? To me, it appears to be a stretch.

For one, large-scale deviations from the Budget announced last February are unlikely, given that we are midway through the year. Second, given that the new Finance Minister is still learning the ropes, she may prefer to open her innings with a staid Budget.

Given the current milieu, I expect that there may just be some tinkering around the edges. These could manifest as:

– Some reclassification/re-ordering of GST categories for consumer-facing industries, which are facing softening demand (Such as automobiles and some FMCG firms).

The aim would be spurring demand on the back of price-cuts. The recent tirade against anti-profiteering could be viewed as a nudge to manufacturers that they must pass on all ensuing benefits.

– A small increase in the income tax-exemption limit or minor changes in the slabs.

– Measures to encourage spending on infrastructure (more than measures, we need better accountability regarding timely project completion).

– Measures to provide some respite to the rural sector (Perhaps on the agricultural front or by announcing easier credit terms)

– On the whole, tepid tax collection figures in the recent fiscal year will reduce the latitude for large-scale tax cuts.

Also, given that this Budget immediately follows the Elections, there may not be any political angle to it. Consequently, I feel the announcements may be more tactical, aiming to cause as little disruption as is feasible.

In a nutshell, my expectations are decidedly more conservative than those of many others. However, I would not mind being proven pleasantly wrong on Budget Day.