Budget 2019, pro-farmer, pro-middle class as expected says corporate India, hails focus on AI, digitisation

The interim Budget is a bold attempt to make India's growth more inclusive

FP Staff February 01, 2019 19:06:24 IST
Budget 2019, pro-farmer, pro-middle class as expected says corporate India, hails focus on AI, digitisation
  • The interim Budget is a bold attempt to make India's growth more inclusive

  • The pro-poor and pro-middle class Budget has quite a few number of goodies for the middle class and the farmers

  • Budget estimate on the revenue front appears unconvincing

Making a big populist push in its final budget before elections, the Narendra Modi-government on Friday exempted people with an earning of up to Rs 5 lakh from payment of income tax, announced an annual cash dole-out of Rs 6,000 to small farmers and provided a monthly pension of Rs 3,000 to workers in the unorganised sector.

Converting what was supposed to be an interim budget or a vote on account into an almost full-fledged budget announcement in the Lok Sabha, Finance Minister Piyush Goyal proposed an array of incentives for both middle-class and farmers, whose disenchantment was said to have cost the BJP dearly in recent assembly elections.

Hailing the budget as pro-farmer and pro-middle class, India Inc shared its views with Firstpost;

Harsh Goenka, Chairman, RPG Enterprises

Tax benefits to individuals are expected to increase discretionary spends thereby impacting the auto sector which also means positive for auto ancillaries. Commitment towards infrastructure and renewables further augers well with our business interests. Outlook towards AI and digitization is a sweetener for Indian tech sector.

Paresh Parekh, Tax Partner, EY India

Digitisation and automation is the new mantra - online income tax compliances, online tax assessments, automated return processing, single point approval for carrying out manufacturing activities and processes in warehouses, full and comprehensive digitalisation of export/import transactions by leveraging RFID technology, etc are highly impactful on how businesses interact with government authorities.

Budget 2019 profarmer promiddle class as expected says corporate India hails focus on AI digitisation

Representational image. Reuters.

Rajesh Uttamchandani, Director, Syska Group

As India is poised to become a $5 trillion economy in next five years, there is an immense opportunity for Indian organisations to develop and flourish. With the rapid proliferation of new age technologies such as internet of things, artificial intelligence and others, we welcome the Government’s keen focus on building a digitally vibrant India in the next few years. This will provide an opportunity for companies such as Syska to introduce IoT enabled products that are affordable in the Indian market and help in developing smart cities. Additionally, as energy efficient product & solutions are seeing increased adoption, we are pleased with the Government providing 143 crore LED bulbs to rural areas. This resonates with our mission of providing energy efficient LED lighting solutions that are ‘Made in India’ to every Indian household.

Sudhir Kapadia, National Tax Leader, EY India

Most commentators had predicted fairly generous reliefs for farmers and lower income earners in the Interim Budget before the general elections and the Interim Finance Minister certainly did not disappoint. He seems to have managed the fiscal deficit both for 2019 as well as the next year pretty well at 3.4 percent of GDP despite a significant increase in expenditure of 75,000 crores for the farmers income support, pension scheme for unorganised workers and a 100 percent jump in the personal tax exemption threshold from 2.5 lakhs to 5 lakhs. It is quite possible, though, that next year’s actual fiscal deficit may end up slightly higher at 3.5 percent of GDP. There are numerous other proposals like increase in the TDS exemption limit from 10,000 to 40,000 for bank interest, on rent from 1.8 lakhs to 2.4 lakhs, extending housing income exemption from one to two self- occupied houses etc which reveals a keen desire to significantly ease the compliance burden for small and medium tax payers.

Pramod Menon, CFO, RPG Group

It’s a Budget which should enable GDP to grow at over 7.5 percent as it blends consumption-led growth (through increased disposal income with the low & middle class) with investment driven growth (through spends in infrastructure, railways & roadways, ports & airports, housing & real estate and digital initiatives).

Adhil Shetty, Co-Founder and CEO, Bankbazaar

This Budget has come as a bounty to the people of India. On one hand, the government has introduced the concept of minimum income guarantee scheme of Rs.6000 for farmers with small holdings of 2 hectares or less. On the other hand, it has increased the income tax rebate for people with income up to Rs.5L, bringing in relief in the form of higher savings. For working professionals, the Budget provided relief with the government raising the gratuity limit from Rs 10 lakh to Rs 30 lakh. The standard deduction has been increased and the TDS threshold on interest earned on bank and post office deposits is up from Rs.10,000 to Rs.40,000. All these measures when put together can have an impact on the total amount the average Indian manages to save in a year. This will boost spending in the economy, driving growth further.

Sudip Bandyopadhyay Chairman, Inditrade Capital Ltd

Despite the fact that it was a vote on account Budget, there were a number of interesting initiatives announced. Some of these, such as the tax relief for the middle class, augmenting agriculture sector incomes for small farmers, etc., will fuel consumption; others, like, modifying tax provisions related to house purchases and rent, raising thresholds of certain categories of income that attract TDS, etc. were pragmatic. Most importantly, the Budget evidenced that it was possible to achieve high growth while keeping the fiscal deficit (and even inflation) low.”

Saba Adil, Chief People and Operating Officer, Aegon Life Insurance

The mega tax relief is a noteworthy move as with this, the limit significantly increases from Rs 2.5 lakhs to Rs 5 lakhs. The no tax for people earning a gross income of up to Rs 6.5 lakhs managed with the right kind of investments will give an impetus to life insurance industry as insurance is an important tax saving tool.
Ashok Mohanani, Chairman and Managing Director, Ekta World and Vice-President, NAREDCO.

Given this is a pre-election Budget, it garners more attention than other years and has raised hopes for taxpayer-friendly Budget. While there were many proposals aimed at boosting the infrastructure, re-instating standard deduction was probably the notable benefit for the salaried class. Exemption of TDS on rented properties up to 2,40,000 per annum is also a favourable move for the common man. This can lead to a rise in demand from investors.

The allocation of 19,000 crores in Budget 2019 towards Pradhan Sadak Yojana is welcomed as it is a necessity for India to remain firmly on a development path. The two-year relief for notional tax on unsold properties and benefits U/S 80 IB has increased to one more year-2020 are welcome moves and will help developers given the current industry consolidation post-RERA. The indirect benefit of the Budget such as income tax support schemes will increase the disposable income thereby increasing the purchasing power of potential buyers driving up the sales velocity. Also, income tax for all housing projects till end of March 2020 has given a relief.

Amit Wadhwani, Co-Founder, Sai Estate Consultants

The direct and indirect benefits of the Interim Budget 2019 are likely to bring a profound change in the demand and supply economics of the real estate industry. Since affordable housing is the need of the hour, extending the benefits under Section 80-IBA of the Income Tax Act for one more year will surely lead to a rise in end-use consumption of homes. Also, with inflation at an all-time low and the announcements on income tax rebate schemes will provide impetus to home buying sentiment in the country. Secondly, extension on period of exemption from levy of tax on notional rent, on unsold inventory from one year to two years, is a welcome move for the builder community. This Budget ahead of the election looks like a balanced and inclusive one with thrusting growth and enhancing consumption at its centre.

Mitesh Shah, Head of Finance, BookMyShow

The interim Budget for 2019 has been a shot-in-the arm for several sections of the society through its tax relief measures for the middle class and mega schemes for farmers. The Budget, however, did not offer clarity on issues surrounding the angel tax much to the dismay of the industry’s expectations. Facilitating a conducive growth environment for such companies is key and hence, clarity around taxation and the regulatory environment will further help build a strong technology ecosystem which can contribute to the government’s vision of India as a $5 trillion economy over the next 5 years.

It is probably for the first time in several years that the entertainment industry has been hailed as a force of employment generation. While the Finance Minister has offered incentives to the film industry, it is also worth recognising the huge scope that live entertainment offers, for employment and growth of the Indian economy. We hope that the GST Council along with the government can find solutions to streamline the existing tax structures for this sector as well and bring it below the current rate of 28%, to enable a well-rounded ecosystem.

Hitesh D Gajaria, Head of Tax, KPMG in India

The Interim Budget of 2019 is focused on small farmers and small tax payers. By proposing to extend full tax rebate to small taxpayers earning taxable income up to Rs 5 lakhs, and increasing the standard deduction to salaried and pension earners up to Rs 50,000, the government has done well to pay heed to the small taxpayers’ contributions in nation building. The proposals also focus on areas such as social infrastructure, ease of doing business, simpler tax compliances and assessments.


Khushru Jijina, Managing Director, Piramal Capital & Housing Finance

The Interim Budget for FY20 aims at a fine balance between the upliftment of the rural economy as well as incentivising the high spending urban middle class. The budgetary provisions for India’s rising middle class is expected to stimulate demand and help attain the targeted economic growth. Budgetary outlays aimed at the real estate sector are encouraging for the sector. Benefits like rolling over capital gains tax to two homes and exempting income taxes on imputed rent for the second occupied home would stir up home demand especially in the affordable segment.

Additionally, the real estate developers would be benefited by the extension of the exemption period for levying tax on unsold inventories at a time when the sector is undergoing liquidity stress. Also, we expect a favorable decision from the GST council overseeing ways of normalizing the tax’s impact on developers as well as end consumers..

Ishan Gupta, MD, Udacity India

The Budget has clearly recognised the importance of technology in the growth of the country by announcing the development of the National Artificial Intelligence Portal. The government move to convert Indian villages to digital villages in the next 5 years with 1 lakh digital villages seems to be promising as this would help us educating more and more learners in tier 2 and tier 3 cities.

Budget 2019 profarmer promiddle class as expected says corporate India hails focus on AI digitisation

Representational image. Reuters

Priti Rathi Gupta, MD and promoter, Anand Rathi Share & Stock Brokers and Founder of Anand Rathi's LXME (Digital financial planning platform for women)

The FM did what was the need of the hour by encouraging MSMEs and women entrepreneurs in boosting the economy. The increase in basic exemption limit to Rs 5,00,000 will stimulate additional investments and disposable income resulting in more investment power. I also feel tax breaks for women returning to the workforce will prove to be a push in the right direction.

Vikram Chari, Founder and CEO of SmartOwner Services, India

Real estate stakeholders will find little to cheer in the interim budget 2019. Failures on the two pressing needs: Rationalising the 12 percent GST on under-construction projects, and allowing GST offsets against construction costs for commercial properties, indicate a continuing inefficiency in realty markets. At a time of huge growth potential and the rising supply-gap, such barriers to market forces will be a disappointment to developers, home buyers, and investors alike.

Parizad Sirwalla, Partner and Head, Global Mobility Services-Tax, KPMG in India (Personal Tax)

The government continues to focus on use of technology to simplify overall tax process. Measures like processing of tax return and refund in 1 day and fully automated e-assessments are steps in that directions. Overall, interim-Budget 2019 is a welcome move from the Government.

Navtej Singh, CEO Digital Business, Hitachi Payment Services

The developments in recent years on digitizing payment transactions have been, by and large, limited to urban and semi urban locations. With the government’s objective to setup 1 lakh digital villages as was announced today, we hope that the convenience, ease of use and speed that underline every digital transaction is extended to the remotest corners of the country. Such measures will encourage payments solution providers like us to introduce newer innovations to increase digital payments penetration and consequently, financial inclusion.

Himanshu Pujara, Managing Director, Euronet Services India

Initiatives such as digitization of export and import transactions and setting up 1 lakh digital villages in the next five years, are certainly going to create a headway for India to become the largest cash-less economy in the world. We are also excited to see Government’s push towards AI.

L Badri Narayanan, Partner, Lakshmikumaran & Sridharan attorneys

The Budget as expected is populist. The focus of the Govt is on the middle and lower middle-income groups. They have been bearing a large part of the tax incidence (both direct and indirect). The exemption for individuals less than 5L income will go a long way in providing relief. At the same time, the tax collections may not be affected too severely as the total contribution as percentage of overall tax maybe low. So this move balances the requirements of robust tax collection with larger tax base and giving relief to a targeted group that has been affected by the fiscal developments over the years”

Rahul Jain, EVP, Edelweiss Wealth Management

Overall, it is a positive and balanced Budget for all the sectors concerned. As expected, it is set to enhance the rural economy and cheer the middle class. The higher exemption for tax payers will increase the purchasing power of the individuals and the buying power of the growing section also suggests that it will become a driving force within the Indian economy, with creation of more investment, thereby providing a further boost to economic growth.

Jitender Singh, Founder & CEO, MiniDukan

It is great news for companies which deal with customers in Tier 4 to 6 towns, that the Government will introduce 1 lakh digital villages in the next 5 years. Digitization of rural areas has increasingly become a necessity, as a large section of our consumers are based there. In addition, the GST provisions given where SMEs earning less than 5 crores will have to file GST only once in 3 months is sure to relieve some of the load faced in recent years. The greatest benefit for us will be the reduction of taxes on salaried individuals which will result in greater buying power, which is exactly what we have been hoping to achieve. This Budget is sure to provide a great boost to the overall performance of SMEs.

Killol Pandya, Head–Fixed Income, Essel Mutual Fund

Since the Budget was going to be the last one before India goes to general elections, the budget reiterated the achievements of the present government over the past few years in the areas of rural infrastructure development, controlling long term inflation trends, increasing tax base and developing MSME and farming sectors. Since the Railway Budget stands merged with the general Budget, we may note that the government has allocated an impressive Rs 1.58 trillion towards development of our Railways.

The Budget outlays paid considerable attention to national defense whose total outlay was at about Rs 3 trillion. The government has envisaged disinvestment to generate about Rs 90,000 cr in FY19-20. On the fiscal front, the government noted that the target for FY19-20 was about 3.4 percent. This level of fiscal deficit is more or less in line with our internal expectations.

Mitul Thapliyal, Partner, MicroSave Consulting

This is a populist Budget. Government has tried to support the middle class, MSMEs, framers and even nomadic population. However, in all of it, middle class seems to have gained the most out of it with tax exemption.”

“Income support of INR 6000 to each farmer is a step in the right direction and, if executed well, can create a robust channel for cash transfer to farmers by subsuming some of the subsidies. However, execution of this scheme is going to be challenging in terms of targeting as well as availability and access to last mile banking points. Our recent study in Jharkhand shows that beneficiaries have to travel about 20 km and spend about INR 370 to withdraw subsidy money from their bank account.

Arun M. Kumar, Chairman and CEO, KPMG in India

The interim Budget is a bold attempt to make India's growth more inclusive. The increase in allocation for agriculture and rural sectors stands out. It aims at stimulating consumption by reducing the burden on the middle-class. The budget aims to expand the formal economy; the 2 percent interest subvention scheme for GST-registered MSMEs is likely to encourage more firms to be covered by GST. The extension of affordable housing benefits should create new momentum in real estate activity in the country. The budget lays out a vision to make the country ready for next generation challenges

J C Sharma, Vice Chairman and Managing Director, SOBHA Limited

The exemption on levy of income tax on notional rent on a second self-occupied house is welcome move for home buyers who are not earning any income on the second house. Earlier, income tax on notional rent was payable if one had more than one self-occupied house. Moreover, the threshold for deduction of tax on rent has been increased from Rs 1,80,000 to Rs 2,40,000. This will encourage home buyers looking to buy a second home for long-term investment. Similarly, the benefit of rollover of capital gains under section 54 of the Income Tax Act has been increased from investment in one residential house to two residential houses for a tax payer having capital gains up to Rs. 2 crore. This means now home buyers will be exempted for capital gains tax not just on one home but two. This will help boost the demand for homes further.

Ullas Kamath, Joint Managing Director, Jyothy Laboratories

The budget presented by the Finance Minister comes with a holistic approach towards the upliftment and betterment of the entire Indian society. Focused on easing out processes and efforts taken in improving the lives of the farmers will help in shaping up the rural economy of the country. The decision of reducing the tax burden on the salaried individual’s will boost the consumer sentiment thereby aiding added purchasing power. The balanced efforts taken towards the rural and the urban economy will help in boosting the demand supply chain of the country.

BJ Maheshwari, Managing Director and CS cum CCO, Dwarikesh Sugar Industries

As expected, the Budget has come in aid of the farmers with various schemes specifically targeted to provide relief to them. The budget has also presented some interesting initiatives for MSMEs by providing interest subvention and providing easier access to loans. This should help the sector and help in strengthening the economy.

Shishir Baijal, Chairman & Managing Director, Knight Frank India

For the demand side, the Budget has ensured better liquidity and lower tax burdens on the purchase of homes. The benefit of rollover of capital gains has been increased from one house to two houses, upto INR 2 Crores (once in lifetime), is a tremendous step by the government that will boost sales in both primary and secondary markets. On a broader canvas, the changed direct tax implications including exemption of taxes till Rs 500,000 p.a. automatically increases the disposable income, especially for the middle-income groups. We believe this step along with the increased standard deduction limit will in some way translate to an improved affordability for house purchase, thus aiding demand for the sector. With all the sops announced by the FM today, the fiscal deficit being at predicted 3.4 percent further spells reassurance of financial discipline.

Sanjaya Gupta, Managing Director, PNB Housing

Finance Minister Piyush Goyal’s thrust on the middle class, in his Interim Budget 2019-20, is welcome as it will place more disposable income in the hands of the salaried class, small traders and businessmen, which will in turn boost the affordable housing segment. With various sops announced for the middle class — such as the IT exemption on annual income, tax exemption on notional rent on a second self-occupied house and the benefit of rollover of capital gains from investment in one residential house to two residential houses — will help both existing and potential homebuyers. Besides, the extension of benefits under Section 80-IBA of the IT Act for housing projects approved till March 2020 will give a big impetus to the real estate sector. The Budget will also have a positive impact on first-time homebuyers.

Shailendra Kumar, Director & CIO, Narnolia Financial Advisors

In the short-term, the stimulus of Rs 93,000 crore to salaried employees and farmers means a boost to consumption but much-needed infra and capex spending continue on the backseat. Budget estimate on the revenue front appears unconvincing. Though one should not take a full financial year view on the basis of this Budget as policies of the new government post general election in May would finally decide how government finances look when we end the coming financial year FY19-20.

Mini Nair, CEO & Executive Director, Essel Finance Home Loans 

The pro-poor and pro-middle class Budget has quite a few number of goodies for the middle class and the farmers. The government has succeeded in maintaining the fiscal deficit less than 3.5 percent, just 0.1 percent above the expected levels. The Direct Tax exemption limit for the salaried class has been raised to Rs 5 lakh per annum, and someone having Rs 6.5 lakh per annum as salary, will have zero tax liability. The net income of the prospective beneficiaries with salary ranging from Rs 3-6 lakh would be able to save more as they won’t fall under the IT bracket now. This opportunity would allow the lower middle class families to buy their first home and boost the affordable housing segment.

Also, the standard limit deduction increase from Rs 40,000 to Rs 50,000 would provide a fillip to this category. Moreover, the move taken to grant exemption to tax on the Notional Rent on the second home would help the middle class to invest in second homes. Meanwhile, the Capital Gain Tax exemption under Section 54 has been raised to Rs 2 crore is also a welcome change. The tax rebate given to affordable housing developers got extended for one more year. All these benefits would help the housing sector to perform better in the coming year. Overall, I feel the budget would help to improve domestic consumption and revive the rural economy.

Charles Frump, Managing Director, Volvo Car India 

We welcome the Government’s vision to protect the environment and lead energy revolution with Electric Vehicles in the coming years. Volvo Cars’ future roadmap is completely in sync with this vision as globally we plan to go fully electric in the next few years. The fully electric car will make its entry into the Indian market soon after its global launch. We not only plan to launch the first-ever locally assembled plug-in hybrid vehicle in India later this year but also bring in four more plug in hybrid vehicles next year.

Vinay Singhal, Co-Founder & CEO, Vatsana Technologies

Today's Budget has proved that the government is poised to build middle-class, farmers and women development in the country, the government is laying out the vision for the most important dimensions for the next 10 years to make India a $10 trillion economy and enhance ease of living including development of roads, railways, seaports, health, among other things. Removing the tax slab till 500,000 is certainly going to help middle-class to save more money. Though 6,000 is a small amount but its a welcoming step for farmers. I would call it a poll-targeted Budget, however. IT Return processing in 24hrs and tax assessment electronically is going to increase participation of all classes for sure.

Rikhil Shah, Chief Financial Officer, SBI General Insurance

From social security schemes like Pradhan Mantri Shram-Yogi Maandhan to Ayusman Bharat, this Budget is very positive towards ensuring a larger penetration of insurance in our country. The proposals in sectors like infra and MSME, both of which are seeing fast growth can be very well backed by insurance. The 10 dimensional approach envisioned by the government to grow India into a large economy is ambitious, it would be interesting to understand the future plan towards implementation.

Shailendra Kumar, Director & CIO, Narnolia Financial Advisors 

The Budget announced today was an exercise by the government to improve the fortunes in the forthcoming general election. In the short term, the stimulus of ninety three thousand crores to salaried employees and farmers means a boost to consumption but much needed infra and capex spending continue on the backseat. Budget estimate on the revenue front appears unconvincing. Though one should not take a full financial year view on the basis of this Budget as policies of the new government post general election in May would finally decide how government finances look when we end the coming financial year FY19-20.

The problem here is that on revenue front numbers are not credible. GST collection has remained well below the Budget target for FY19. Not only GST but to some degree even other sources of government revenue like direct tax as well as others like disinvestment and telecom auction have remained below the Budget estimate. These make fiscal deficit target of 3.4% appear unconvincing.

Post the Budget, 10-year bond yield spiked to 7.6 percent as the immediate implication of the Budget on the economic front is- higher market borrowings by the government. Post state election results in December, there were uncertainties on how populist the government would become and how damaging that would be for the economy is settled now and surely it is not as bad as it was feared.

Follow full coverage of Union Budget 2019-20 here

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