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Friday, 1 February 2019

Budget 2019


Surrounded by the budget expectations, announcement has been done by global rating agency Fitch that interim budget will follow higher pre-election spending. NDA government has always put on a great update time by time in their four year governance which has been quite remarkable. As 2019 is an election year, budget is expected to have tax sops for the middle class and also for corporate along with the relief package to address agrarian distress and the stressed small scale industry sector.

As the parliament has began the budget session 2019 addressed by the President Ram Nath Kovind, Prime Minister Narendra Modi has confirmed that BJP-led government is planning to present an Interim Budget and not a vote-on-account. All the lawmakers have been urged by Prime Minister Narendra Modi to utilize the budget for having the constructive debates.

Piyush Goyal in charge of Arun Jeitley is leading the finance portfolio. Interim Budget will be announced on 1st of February, 2019, whereas full budget is expected to be announced in July this year. Analysts and economists are not expecting much from it but as it is a polling year, the major focus will be on rural boost as per sources. Generally, in every budget, the fiscal deficit as a percentage of GDP (gross domestic product) is keenly watched by Foreign Institutional Investors (FIIs) and institutional investors. It is also one of the main stimuli for the sovereign rating.

According to an estimate by Ajay Jaiswal, President - Strategies and Head of Research at Stewart & Mackertich, Centre's revenue could fall short by Rs 1.1 lakh crore due to lower GST collection.

"It is averaging Rs 96,800 crore per month versus the budget estimate of Rs 1.08 lakh crore per month. Direct tax and non-tax revenue, however, is likely to meet targets. Revenue shortfall in FY19 will mostly be bridged by an increase in off-balance sheet expenditures. These could include pushing the food subsidy expenditure onto the books of FCI among other things. As a whole, we expect modest slippage on the fiscal target by 20bps to 3.5 percent of GDP," Jaiswal detailed.

Fitch said longer-term trends are more important to the sovereign rating profile.
"We believe the central government may still be able to meet its fiscal deficit target of 3.3 per cent of GDP for FY19, which would help support its fiscal credibility, although this may be achieved by deferring capital expenditure and postponing bill payments until after March," it said.

Tax deduction to the mutual fund schemes on the lines of ELSS will attract investors to move from equity linked schemes to mutual funds giving them more option for investment in case of lower returns. This simple tax calculator will provide the latest income tax slabs based on your income and takes into account your various incomes and deductions that are available to you in the Income TAax Act. At present, Income Tax has to be filed by every individual who earns more than Rs 2.5 lakh in an assessment year.
Minister without portfolio Arun Jaitley had already indicated that the Interim Budget may go "beyond the traditional” vote-on-account as tackling agricultural challenges "can't afford to wait". 

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