- A main feature of this budget is that it is the last budget to be presented by the current government before it faces the general elections next year. Therefore, it will be targeted at getting votes. This means that it could well be a `populist` budget with pay-off's for voters in terms of lower taxes. Another possibility is that tax rates are left unchanged for corporate, but there are a host of announcements on increased outlays to social sectors like education and health.
The main challenges that this budget also needs to address are (i) inflation, (ii) the slowdown in the GDP, particularly in the manufacturing sector, (iii) a much tougher global environment and its impact on growth through the external sector in the months ahead and (iv) a rising subsidy burden, which does not fully reflect in the fiscal deficit. Therefore, on balance,all the broking house's expects that the key features of this budget will be as given below:
- Reduction in direct tax rates for individuals but not for corporates Some reduction or elimination of dividend distribution tax.
- Rationalization of excise duties, including the auto sector.
- Rationalization of exemptions for corporates.
- Lower customs duties for commodities to contain inflation and rationalization of inconsistencies.
- Enhanced credit availability for the agriculture sector.
- A sharp increase in the outlays for social sectors like health and education
I expect the sectors to be positively impacted by the budget are auto, capital goods, cement, construction, FMCG, logistics, oil and gas, metals, fertilizers and pharmaceuticals. However, it expect largely neutral for the sectors like media, telecom, information technology and real estate.