Union Finance Minister Piyush Goyal on Friday presented his maiden Budget in the Lok Sabha. In the "Interim Budget", he outlined the government's proposed vision for 2030, provided sops for middle-class tax payers and announced an annual dole for small farmers.
Here are the reactions for the Interim Budget.
"I was bracing for a populist,profligate budget driven by ‘election panic.’ I’m just grateful that the reliefs to the key middle class & farmer segments were delivered in a measured way without risking bankruptcy of the economy. This was a controlled, pump-priming exercise..." tweeted Anand Mahindra.
'Budget dole-outs to boost consumption, but fiscal math a big worry'
The interim budget has prioritised populism over fiscal prudence, and the moves to appease voters in general, and the farmers and the middle-class in particular ahead of the elections will boost consumption,economists said.
However, the moves like a basic income to farmers and doubling the income tax exemption threshold to Rs 5 lakh come at a cost to fiscal math, they said.
“The continuous deviation from the FY19 fiscal deficit target and the ‘pause’ on FY20 fiscal consolidation is a negative surprise and the credibility of the target to get fiscal deficit down to 3 percent by FY21 is “now in question”, Japanese brokerage Nomura said in a note.
"Acting Finance Minister Piyush Goyal was very articulate. He presented more of a manifesto than a budget. Relief for middle class home owners and for farmers would be a boost to agriculture, animal husbandry and the realty sector!" Nadir Godrej, Managing Director, Godrej Industries and Chairman, Godrej Agrovet told The Hindu .
Gene Fang, Associate Managing Director, Sovereign Risk Group, Moody’s Investors Service
Budget proposes new expenditures ahead of elections, pressuring fiscal consolidation efforts
· The announced central government deficit targets of 3.4 % for the fiscal year ending March 2019 and 3.4% for the fiscal year ending March 2020, are in line with our expectations.
· No new policies to increase revenues were announced, while a number of expenditure measures were announced that will increase outlays and put pressure on the government’s ability to meet its fiscal deficit target.
· Ongoing slippage from the government’s budgeted fiscal deficit targets over the past two years, and our expectation that the government will face challenges meeting its target again this coming fiscal year (ending March 2020) does not bode well for medium term fiscal consolidation. We view this continued slippage as credit negative for the sovereign.
· India’s high debt burden remains its biggest credit challenge and is not expected to diminish rapidly. India’s low income levels lead to significant development spending needs and constrain the scope of tax base broadening.
· Policies aimed at promoting expenditure efficiency through rationalization of government schemes and better-targeted delivery, including through direct income transfer schemes, are credit positive when implemented effectively. However, their effects will take time to bear fruit.
· Increased fiscal outlays as a result of the introduction of a new direct income support scheme for farmers and subsidized agriculture loans are likely to boost the rural economy through consumption in the near-term, but will have a fiscal cost.
Gaurav Dua, Head of Research, Sharekhan by BNP Paribas
"Interim Budget provides fiscal stimulus of close one trillion rupees through direct cash benefits to small & marginal farmers and tax sops for the middle class. At the same time, the fiscal deficit slippages are proposed to be limited to 3.4% of GDP. The government has not got carried away and the dole out in the run up to elections are in line with expectations. What’s more, it would boost consumption and is positive for the economy and the growth in the corporate earnings. Despite constraints, the he capital expenditure allocations have also remain healthy with continued focus on infra development. Overall, a prudent budget in the light of the political compulsions and macro situation.”
Siddharth Roy Kapur, President, Producers Guild of India
“We are delighted that the immense contribution of Indian cinema towards employment generation in the country has been acknowledged and applauded in Parliament during the presentation of the Union Budget. The announcement of a single-window clearance mechanism for Indian film makers filming within India is a significant step and has the potential to play a huge role in boosting tourism in the country. The amendments in the Anti Camcording provisions will support the industry’s growth by curtailing illegal recordings of films in cinema halls and will go a long way towards reducing piracy.”
Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles
“The mission of bringing an Electric Vehicle revolution to India by 2030 is a truly path-breaking and will surely provide much-needed impetus to the industry. The government’s focus on the use of clean energy in the transportation sector would certainly help our country tackle the issue of climate change. EV industry welcomes our Hon'ble Finance Minister’s commitment towards making the country pollution free, in his budget speech 2019-2020. We hope the government would soon announce a concrete plan of action with its time-bound implementation in order to fulfil its stated vision. SMEV strongly feels that an initial high dose of incentives and actions must be taken in the next 1 or 2 years to relaunch the electric mobility mission that has sort of lost steam in the recent years due to flip flop of policies.”
Harsh Goenka , Chairman, RPG Enterprises gave a thumbs up to the Budget.
"BJP - pro-poor, pro-farmers with pathbreaking reforms benefiting entire society Opposition - anti-poor, populist, meant for the rich. Lacks imagination and sincerity. How will the jobs come? CII/ FICCI/ Businessmen- Will give a boost to economy. Full of ‘josh’."
Too little, too late, say economists
Agricultural economists and farm activists say the schemes announced in the Budget will not be enough to alleviate farm distress.
“This is too little, too late,” said Ashok Gulati, agricultural economist and the Infosys chair in agriculture at Indian Council for Research on International Economic Relations (ICRIER). “At ₹500 per month, it will amount to less than 1/15th of an average household’s income. Per annum, it’s peanuts.” He suggested that if the government really wanted to make a difference through an income support scheme, it should double the amount given by reducing some food and fertiliser subsidies.
“It has been done half-heartedly,” said agriculture and food policy expert Devinder Sharma. “I don’t know how you can pull farmers out of distress and prevent farmer suicides with just ₹500 per month…The government has given much bigger support to middle class through tax breaks. This is a middle-class-centric budget, not a farmer-centric budget.”
Chidambaram
"It was not a vote on account. It was an account for votes." This was former Finance Minister P. Chidambaram's reaction to the Budget.
In a series of tweets Mr. Chidambaram said: "Thank you Interim FM for copying the Congress' declaration that the poor have the first right to the resources of the country,"he added in response to the government's announcement assuring minimum income support for farmers."
As I had warned, Government misses Fiscal Deficit target for 2018-19. Another red flag rises: CAD is 2.5 percent,"
