The 2019 Budget primarily focuses on the rural economy, small farmers, salaried class, infrastructure development and lower/unorganised income segments; all of these factors combined should have positive impact on customer sentiments and spur consumption in the short to medium term. The series of fiscal consolidation measures including income tax relief given to the salaried class, middle income families and the focus given on rural sector in the form of tax and tax-related exemptions like capital gains on property are all welcome steps to increase disposable income in the hands of the common man.
Addressing the distressed farm communities, the agricultural income support schemes and other measures announced to boost rural employment and infrastructure including roads & highways will augur very well for the Indian economy in the long-term. Overall, the interim budget announced ahead of the upcoming elections gives a perfect balance by doling out concessions for the common man, without compromising on macro-economic factors underpinning the Indian economy.
With greater purchasing power in the hands of people, it will boost consumption of big-ticket assets and goods like autos and real estate as well. With abolition of capital gains on additional property, the consumer will breathe a sigh of relief while this will also generate business activity in the real estate sector which was impacted by the slowdown in recent past. The government’s continued focus on construction of 27 km highways per day will also augur well to provide mile-to-mile connectivity and further boost transportation sector.
At the macroeconomic level, bringing the fiscal deficit down to 3.4 per cent in the current financial year and maintaining the current account deficit at 2.5 per cent of GDP this year are very encouraging announcements. Overall, the 2019 budget has something to offer to everyone, however we would have wished for more for the corporate sector in the form of corporate tax levies and concessions/subsidies for Research and Development in the field of electric vehicles and electric vehicle components. We would have also hoped for more clarity with regard to infrastructure for the charging around electric vehicles but expect that more announcements will come under the upcoming Fame II scheme to be announced by the government soon.
With a focus on Make in India, it is also imperative for the government to generate skill enhancement opportunities in the field of EVs, especially lithium-ion batteries and related components. Although the recently announced cut in customs duty on certain electric vehicle components from the earlier 15-20 per cent to 10-15 per cent at present will augur well for EVs during the longer term, there could have been more done in this regard to make India adopt EVs at a faster rate.
Leading economies across the globe have been banking upon electric vehicles, in order to achieve sustainable development. To the same end, the interim budget announcements favoring electric vehicles with respect to renewable energy are encouraging. We believe that with the government promoting electric vehicles and use of renewable energy sources, India is on the right track as far as one of the most high-potential manufacturing hubs for the EVs in the long-term. Consumers, on the other hand of the spectrum, will be more likely to adopt electric vehicles, inspired by the government’s vision of a Clean and Green India.
The focus on Artificial Intelligence (AI), as India gears up to take the global stage in technology and innovation, is a welcome step by the government. With great talent and skill set of Indian engineers and academia especially the start-ups, a national programme on artificial intelligence catalysed by national center as a hub along with center of excellence will put India in the global league in the field of AI – especially in the back of its strong IT capabilities.
Constructive steps have been taken by the government in order to boost economic activity including enhancing business opportunities for small and medium enterprises also, thanks to a series of direct and indirect measures envisaged to increase the ease of doing business in this space.
The writer is ED of MG Motor India