Populist yet responsible Budget, had no negative surprises

The Budget focused on moderation of taxes with greater emphasis on tax compliance. It stayed away from any loan waiver schemes, though the benefits announced for farmers are recurring in nature and will put pressure on the fiscal math.


The Finance Minister has done a commendable job, walking the tight rope between fiscal consolidation, tax benefits and addressing farmer’s concerns. What was meant to be a mere Interim Budget has been delivered as a populist yet responsible Budget.

The Budget focused on moderation of taxes with greater emphasis on tax compliance. It stayed away from any loan waiver schemes, though the benefits announced for farmers are recurring in nature and will put pressure on the fiscal math.

Although there was a 0.1 percent increase in fiscal deficit target to 3.4 percent of the GDP, this slippage is within an acceptable threshold keeping in mind that this is an election year and the Budget was bound to be populist in nature.

We definitely give the Budget a big ‘thumbs up’ as it had no negative surprises. Given the Budget constraints and political need to appease all, we rate this Budget a 4 out of 5.

The Budget had no negatives for any sector. Financial markets may derive some concerns arising from a higher deficit target of 3.4 percent budgeted for the next fiscal year. There will be scepticism on whether the new government would be able to meet this fiscal deficit in control, given that some of the benefit schemes announced in the Budget are recurring in nature.

The negative spill-over from a loose fiscal policy could lead to increasing bond yields as well as a weakening currency, especially in a volatile election year.

However, the economy is resilient enough to take this slippage in its stride. Increase in tax exemption will leave some extra money in the hands of consumers that will drive consumption.

Auto, consumption stocks were clear winners on the Budget day. The Budget has again given a big fillip to the consumption sector and has given additional disposable income in the hands of the Indian consumer, both rural and urban.

There was also rebate for persons having two self-occupied homes. Previously there was a tax on notional rent derived from second home which is now fully exempt thus benefiting people who has family in one city and is employed in another.

Exemption from interest received from saving account has been increased
to Rs 40,000 from Rs 10,000 previously benefitting people who depend on
interest income for livelihood.

Auto, consumption stocks were clear winners on the Budget day. The Budget has again given a big fillip to the consumption sector and has given additional disposable income in the hands of the Indian consumer, both rural and urban.

There was also rebate for persons having two self-occupied homes. Previously there was a tax on notional rent derived from second home which is now fully exempt thus benefiting people who has family in one city and is employed in another.

Exemption from interest received from saving account has been increased
to Rs 40,000 from Rs 10,000 previously benefitting people who depend on
interest income for livelihood.

Auto, consumption stocks were clear winners on the Budget day. The Budget has again given a big fillip to the consumption sector and has given additional disposable income in the hands of the Indian consumer, both rural and urban.

There was also rebate for persons having two self-occupied homes. Previously there was a tax on notional rent derived from second home which is now fully exempt thus benefiting people who has family in one city and is employed in another.

Exemption from interest received from saving account has been increased
to Rs 40,000 from Rs 10,000 previously benefitting people who depend on
interest income for livelihood.

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