2019 Budget came up with quite a bang, with all the surprises that we least expected, but what does it mean to an average retail investor. We summarise a few key pros and cons for the comfort of our readers.
The upto 5 Lakh taxable income rebate - While this announcement brought along with itself much confusion, it basically means you pay your taxes as you would usually do. Incase your net taxable income is 5 lakhs or under you get an entire rebate. This rebate should increase the net disposable incomes and savings of people majorly in II Tier & III Tier Cities. The government also proposed tax exemption on the rent of a second home. Increased spending on the housing for all project should very highly impact sales of cement companies and housing finance companies a space that needed increased government spending for quite some time now. Beneficiaries we believe - Jubilant Foods, Cholamandalam Finance, TVS Motors
The Agricultural & Rural Support- Budget this time around offered to lower interest rates for farmers and offer small farmers (with less than 2 hectare of land) a Rs.6,000 sum per annum in equal parts of Rs.2,000 directly in their bank accounts.A major part of India is still rural and we have always wondered how big the economy would become if organised companies would reach that segment of the population. Companies had very little motivation to enter the rural markets majorly owing to the lack of roads, electricity, banking and spending power. Over the past years the government had succeeded in making the rural market accessible, but with the proposed plans it would uplift the spending power among rural India. Beneficiaries we believe - TVS Motors, UBL, Deepak Nitrite, Escorts, Bajaj Corporation
21% increased spending on North East Infrastructure- The added spending towards the inclusion of our 7 sisters in the East would boost spending on infrastructure like roads, network grids etc and have favourable impacts on a lot of companies. Along with them increased accessibility to these markets would pull them towards a more organised market. Power shortages have been a major issue along north east which should soon be a problem of the past. We are looking forward to an increasing trend in personal discretionary spendings majorly like electric and kitchen utility. Beneficiaries we believe - Bajaj Electricals, Dabur, Colpal.
Stamp Duty- To boost state economies, financial securities were exempt from stamp duties if transacted in certain states. This exemption of stamp duty has now been lifted implying every one has to pay the duties to the state where they are registered in. This should boost the state and centre revenue but will impact large and institutional investors.
However, an expansionary budget like this is good for the economy at large owing to the increased spendings especially targeting the socio-economic upliftment of people from all walks of life.