30 Jan 2020
Posted in Business Fundamentals
Consumer-centric budget 2020 to restore consumer and investment sentiment in India, says GlobalData
India, which is facing its worst economic slowdown in a decade, is caught in an inter-play between reducing the fiscal deficit or missing out of reaching the goal of US$5 trillion economy. With only two days to go for the Union Budget 2020, all eyes are now on the extension of income tax slabs or reduction in rates, lightening burden on the middle class to address spurring liquidity issues prevailing in the economy, says GlobalData, a leading data and analytics company.
Shruti Upadhyay, Economic Research Analyst at GlobalData, says: “Ailing with subdued consumer sentiment along with falling consumer durables production, the sector anticipates staggering stimulus packages from the upcoming Budget to hasten consumer demand in the economy. Given the low level of job creation, rise in unemployment rate and low growth in wages, the need of the hour is to increase disposable income of the Indian population to kick-start stimulation of domestic demand.”
Agriculture is of critical importance for the Indian economy even though it is vulnerable to climatic conditions. GlobalData expects that the government would address the concerns related to such exposures. Moreover, the PM Kisan Scheme also needs to be implemented in a way to inculcate all the farmers under one umbrella.
A disfigured financial sector expects the Budget to provide stability and Non-Performing Asset (NPA) resolution schemes. Global investors may be invited for purchasing the NPA packages as a solution to the NPA obstacles that hinder the growth of the sector. Stability to the bond market could be provided by revision in interest rates, making it more appealing for investment.
An impoverished technology sector especially, startups face a huge liquidity crunch having an unswerving impact on their operational activities. The sector needs to be supported by dedicated funding and a clearer picture with regards to ambiguities around GST filing frequencies. Tucked under losses and a huge debt burden, the telecom sector expects deductions on regulatory levies in the upcoming Budget.
A depressed automotive sector expects the government to provide cushioning in the form of initiatives such as the ‘scrappage policy’ and reduction in prices through lessening of the overhead charges like insurance, taxes and safety norms.
The Budget is expected to be almost ineffectual for the pharmaceutical industry other than the only plausible solution of a palpable increase in tax deduction that the companies may receive on R&D expenditures.
Upadhyay concludes: “Budget 2020 may act as a major step towards the government’s ‘investment-driven growth’ philosophy and making India a US$5 trillion economy by 2024. The budget is expected to be consumer-centric paired with government initiatives for the MSMEs backed by a strong support from the financial sector.”