Keeping an eye on the upcoming Lok Sabha elections, Finance Minister Piyush Goyal today presented the Narendra Modi government’s sixth and final budget before the polls. Highlighting the key initiatives of the government in the past four and half year, Finance Minister announced no tax on income up to Rs 5 lakh income, farmer income support scheme of Rs 6,000 per year, interest subvention scheme for farm loan takers and new pension scheme for unorganised sector workers along with higher allocation for rural schemes like MNREGA and village roads. Goyal also said that the government has brought down the inflation from 10 percent in the UPA era to 4 percent.
Reforms announced by Piyush Goyal in the Budget on Friday will spur consumption of both rural consumers and the middle class, companies said.
Reactions from Industry Leaders
Dabur CEO, Sunil Duggal
“The measures announced in the Budget are consumption-oriented and will spur spending across bottom-of-pyramid consumers as well as lower middle class consumers, for both staples and discretionary products.”
Paresh Parekh, Partner, Leader Consumer & Retail Tax, EY on the impact on Consumer sector
“Three key buckets of changes proposed (1) higher personal disposable income due to higher tax rebate for up to 5 lacs (2) higher rural disposable income because of farmers package, interest subventions etc (3) real estate and housing sector proposals like no notional tax on second home, capital gains tax exemption for 2 homes and no notional tax for unsold real estate inventories up to 2 years – all these three buckets of changes are potential game changers for entire economy and Consumer sector in particular.”
Puneet Gulati, CEO, Barista
“Increased in personal tax limit will see higher disposable income and with the ever-expanding food sector and delivery module in place, we see higher share of wallet coming to F&B sector. Happy to see relief for farmers and labourers, all in all a positive step to strengthen the purchasing power, which was much needed. Complete digitalization of tax assessment is a welcome step. Interim Union Budget 2019 promises to be pro-growth and ushers a new era of transparency.”
Anupam Bansal, MD Retail, Liberty Shoes
The measures announced in the Budget 2019 looks good from the consumer point of view. If one looks at the consumer perspective the immediate requirement from the government was to increase their power to buy which they have well done by exempting tax for the middle class earning under 5 Lacs and is our right target audience
What happens when they have spendable income in their hands is that they are willing to purchase more, thus benefiting the entire retail ecosystem. The announcement that has been made are consumption-oriented, and will spur spending across consumers as well as lower middle class
In 2019, the market will be defined by the new technologies that change the way consumers interact with their favourite brands, a shift in preferences.As we stand in 2019, on the verge of the new Budget, we can look back at the year that went by and see that there have definitely been some improvements. With consumers still preferring physical stores over online shopping, the buying patterns between the urban and rural population continues to be vastly different.
From the perspective of the industry, if companies are going to target remote geographies like Tier II, III and IV cities, there needs to be improved infrastructural facilities available.
Rishu Gandhi, Founder & Head Brand Strategy, Mother Sparsh
“The budget seems to be more empowering one for the masses which can have more relief on the tax front thus have more money to spend or save. Given more disposable income, the basic human tendency to spend more on lifestyle and comfort will allow young parents to spend more towards their childcare needs as they will be more empowered to spend more towards their loved ones, which will be beneficial for brands catering in this segment. Similarly, 2% interest subvention will be a big relief for startups looking to create in such a competitive environment.”
“A progressive budget! Taking into account the issues being faced by small enterprises and addressing these, will definitely have a positive impact on the startups, thereby leading to more jobs for youth.
The restriction of GST at upto 5 percent for daily use items is a relief for consumers at large and shall help in increasing revenues and sales for retail businesses.”
Tanit Chearavanont, Managing Director at LOTS Wholesale Solutions
“We would like to strongly express that the budget that was presented today will be a huge boon for India; we truly believe that the government’s vision on propelling India into becoming a US$10 trillion economy can be realised in the next 8 years. The vision of a healthy India, with focus on organic farming, coupled with initiatives for the farmers and traders will spell growth for the retail and cash and carry sector. Better infrastructure will aid efficient supply chain management, whilst continued efforts towards digitisation of 5 lakh villages will make e-commerce a household way of consumption in rural areas. The additional direct income for farmers, incentives to develop fisheries and benefits for animal husbandry will help reduce the stress on the sector and uplift the grocery retail segment. The increased sourcing from SMEs will promote indigenous businesses, whist the GST reduction from 18% to 6% for traders with a turnover under 50 lakh will make it more sustainable for them to expand their business in the country.”
Arun Arora, Centre Director, Phoenix Marketcity, Pune
“The present government has certainly initiated some bold steps since coming to power. These decisions were not populist in nature but more for nation building. That’s why last couple of budgets were lackluster from that point of view. This interim budget certainly brings a little relief on the middle-income mass and to our farmers. This is a welcome change. Some of the announcements made by Honourable MoF Shri Piyush Goyal-ji are definitely meeting the expectations of the common man, which will lead to higher consumption, enhanced liquidity in the market, increase in investment and savings. All in all it will also give a much desired push to the real estate. In my view it’s a thumbs up!”
Arvind Mediratta, Managing Director & Chief Executive Officer at METRO Cash & Carry India
The last budget before the general elections is prudent and people focused budget. Direct benefit transfer of Rs 6,000 per year to farmers with less than two hectares land holdings and the outlay of Rs75,000 crore under the PM Kisaan Samman Nidhi will benefit the farming community and will give a major boost to rural disposable income. The big announcement of tax rebate to individuals with income up to Rs 5 lakhs will bring in huge relief to the individual taxpayers. The twin step is likely to push discretionary spending in both rural and urban class. Interest subvention to farmers engaged in animal husbandry and fisheries, and the mega pension plan for unorganised sector workers is a great announcement. The 2 percent interest subvention announced for MSMEs is a positive development that will strengthen the micro, small and medium sector.
Mukesh Kumar, Chief Executive Officer, Infiniti Mall
“It is a well balanced budget. There is something for everyone. This will positive impact on real estate and will propel consumption with higher disposable income in hand”.
Sanjana Desai, Chief Strategy Officer, Desai Brothers Ltd. (Food Division – Mother’s Recipe)
“The budget announced is a positive step for the industry, as it will result in more income for marginal and small farmers and more money to middle class to boost FMCG consumption. The slew of reforms for the rural India coupled with major sops for farmers, middle class and pension schemes introduced for the informal sector will leave more money in the hands of the consumers. This will boost consumption across categories, providing the much-needed thrust to the FMCG industry. The otherwise muted rural consumption is bound to get the desired push if the announcement towards farm and rural sector is implemented in a time bound manner.
Having said this the budget didn’t have much for the overall corporate industry, The industry expected government to rationalize corporate tax rates including Dividend Distribution Taxes which wasn’t included.”
Vartul Jain, VP – Finance, GreyOrange
“It is heartening to see the Government’s continued focus on its flagship programs, Digital India and Make in India, as key drivers to the nation’s economic growth, with a greater focus on digitisation in the rural economy. In line with this agenda, the announcements to set up a national centre for Artificial Intelligence and development of an AI portal through identification of nine priority areas in the segment will be critical to promote the adoption of these emerging technologies in the country and to position India as a front runner in this space across the globe.
The extension of the GeM platform, with a focus on supporting domestic trade and services, retail trading and welfare of traders augur well for the development of these sectors. The continued impetus to boost MSMEs and empower traders will contribute towards the growth of small businesses, fostering innovation and employment.
On the whole, we believe the Government’s thrust on technology along with the emphasis on internal trade in this year’s budget are defining steps, the results of which will be crucial in realising the vision of the $10-trillion economy in the long run.”
Kamal Nandi, President – CEAMA & Business Head & Executive Vice President – Godrej Appliances
“The interim budget for 2019-20 has focused on farmers and the middle class and should boost consumption.
Full tax rebate for income up to 6.5 lacs (including investment under 80 C) will boost sentiments and we foresee a rise in demand for the mass segment of consumer durable goods.
Rural electrification which aims to touch every household by March 2019 coupled with infrastructural push via Gram Sadak Yojana and the rural support schemes will serve as a catalyst in improving the demand for consumer electronics and appliances. Category penetration levels should therefore improve faster.
Also, governments continued attention towards skilling will help improve the quality and quantity of skilled labour – critical to industrial growth.
We also welcome governments attention towards climate change and clean energy. We are committed towards the success of the energy efficiency regime and will continue to support the government in this area.
The FM also talked about the vision of making India a 5 trillion dollar economy in next 5 years and a 10 trillion dollar economy in next 8 years thereafter. We welcome this ambition and would like to affirm that electronics, appliances and AI industry will serve as major growth drivers in achievement of this objective.
The interim budget though did not provide much further impetus to the indirect tax reforms which are crucial for manufacturing and Make in India. We hope to hear some major announcements in the full budget which may provide the desired support to the ACE Industry and electronic manufacturing.”
Shishir Baijal, Chairman & Managing Director, Knight Frank India
The interim budget for FY 2019 – 20 presented today by Minister of Railways & Minister of Coal, Piyush Goyal is very positive. We are pleased to see that the government has taken note of the issues faced by the real estate sector and has addressed them systematically. It has addressed both the demand and the supply side of the sector.
For the demand side, the budget has ensured better liquidity and lower tax burdens on the purchase of homes. The benefit of rollover of capital gains has been increased from one house to two houses, upto INR 2 Crores (once in lifetime), is a tremendous step by the government that will boost sales in both primary and secondary markets. On a broader canvas, the changed direct tax implications including exemption of taxes till INR 500,000 p.a. automatically increases the disposable income, especially for the middle-income groups. We believe this step along with the increased standard deduction limit will in some way translate to an improved affordability for house purchase, thus aiding demand for the sector. A back of the envelope calculation on the new standard deduction rates and other direct tax sops give us a figure of an annual taxation exemption of almost INR 7- 9 Lakhs per annum. We believe that a fair part of the savings from this could be channelised towards real estate. Additionally, the provision of increasing the number of self-occupied properties from one house earlier to two houses now will augment the house purchase decision for people supporting families in another city/towns.
For the supply side, the government has taken into consideration the challenge of unsold inventory and has therefore increased the period of exemption for notional tax on unoccupied units from the prevalent 1 year to 2 years. This will give developers a big relief allowing them to concentrate on sales strategies. To further boost the affordable housing, the government has extended the benefits Under Section 80 (IBA) till 31st March 2020. The government’s commitment towards affordable housing continues and we expect to see more such projects coming into the market. The demand for housing is strongest in the affordable segment. The Finance Minister has also reiterated the government’s commitment to consider a revision on GST implications on the real estate sector by mentioning that a special committee is reviewing the same. This assures us that positive steps are being taken in this direction. With all the sops announced by the FM today, the fiscal deficit being at predicted 3.4 % further spells reassurance of financial discipline. We consider this budget to be one of the best in many years for the real estate sector.
Pramod Kumar Agrawal, Chairman, Gem and Jewellery Export Promotion Council (GJEPC)
“We understand that the budget presented today was a vote on accounts budget and is not a full budget. We welcome Govt.’s thrust on ensuring progress and prosperity through the budget. The relief given in direct taxes to middle classes and farmers will be good for increasing jewellery demand in the country. Also we hope that with the capital infused in the banking sector and banks coming out of PCA will help in solving the shortage of working capital for our exporters. At the same time we are disappointed that the demand for decrease in import duty of raw materials like gold, silver, c&p diamonds and coloured gemstones were not included in the budget today. We hope that during the declaration of the full budget after elections the gems and jewellery sector demands will be addressed.”
Dr. Mahesh Gupta, Chairman and Managing Director, Kent RO Systems Ltd.
“The budget is progressive, and it has surely covered the issues that are existing in the economy. The farm sector was depressed and finally they will get relief. The government has planned to give 12 crore farmers Rs 6,000. This is a big move which will uplift their current condition. It will also generate industrial demand and boost production. Moreover increase of gratuity is again good for the welfare of the people. Furthermore including the below the poverty line in the provident fund network is again a good move by the government.”
Pankaj Khanna, Founder & MD, Gem Selections
The overall effect of the Budget – 2019 is to increase the disposable income of the public at large by reducing the direct tax and by improving the support price of agricultural product burden. This will increase the aggregate demand for the Gems & jewellery industry in the market and give the Gems & Jewellery industry the needed support. The Pradhan Mantri Kaushal Vikas Yogana will improve the skilled manpower in this sector. The GST Regain has been simplified this will make the working of artisan level, as well as small and marginal traders easy and they will need to spend last time and resources on compliances. More instructions of Government bodies with Gem & Jewellery Trade Organisations should be done to give further input’s to the Govt of India is the major foreign exchange earner in India.
Manoj K. Agarwal, CEO, Viviana Mall
The budget is likely to have a positive impact on the overall retail ecosystem. If executed in a timely manner, a considerable increase can be expected in the consumption patterns of the rural population. Also, a higher tax rebate for people earning up to INR 5 Lakhs per annum will entitle a person with higher disposable income. This is likely to have a visible impact in Tier II and Tier III cities, particularly in the FMCG and Retail sector.
Shreyansh Kapoor, Vice- President, Kashi Jewellers
The Interim Budget FY 19-20 came out very positive for SMEs, farming communities and taxpaying middle class. Hopefully, the gems and jewellery industry will see a positive impact as the budget has announced some favorable policies that will benefit our buyer. The extra disposable income will prove beneficial to the luxury retail industry. Encouragement to the infrastructure is also a great vision for overall industry growth as it will connect more and more customers with us especially buyers from tier2 and tier 3 cities. Along with the infrastructure, ‘connectivity via waterways’ is a very positive announcement. It will help businesses to connect through various cities from other regions as well, which were difficult to commute earlier.
Overall the budget has come out very well and we are hoping for the positive effects of the same on the Gems and Jewellery industry.
Saurabh Gadgil, CMD, PNG Jewellers and Director, National Vice President, Indian Bullion and Jewellers Association
The Interim Budget FY 19-20 seems to be in a progressive direction, it lends support and upliftment for the SMEs, MSMEs, agricultural sector and the tax paying middle class. The relief in income tax and various other exemptions, favourable policies towards the SME and agricultural sector will have a directly proportional effect on the gems and jewellery industry. People will have disposable income, it will surely lead to retail growth. This budget also indicates that the ministry feels it is time to clean and organize the gems and jewellery industry by introducing a comprehensive gold policy to develop gold as an asset class, provisional guidelines are being made for Gold Spot exchange, Gold Deposit account, Gold Monetization Scheme, this will form a comprehensive Mines to Market gold policy in the coming months. We are hoping this budget will bring about the required confidence in the economy and benefit the industry in the long run.
Prodyut Bora, CEO, Bonphul Air Products Pvt Ltd.
Interim Union Budget 2019 contains no reforms for the start-up ecosystem. The budget seems to be more empowering one for the masses as the budget kept its focus on rural, small and medium enterprises and middle-class households. While this is an interim budget and the actual realization of the visions (such as the changes in direct taxes in favour of the middle-class) will have to wait till the roll-out of the full budget post the general election.
Furthermore the budget speech did not contain even a single reform directly related to start-up ecosystem. The budget lacked a few expected measures. We were hoping to see a positive action on the issue of Angel Tax which is a major concern but the overall the budget in fact did not have much in store for the start-ups. Though the interim finance minister Piyush Goyal mentioned ‘start-ups’ in his speech quite a few times, there was no major announcement for the ecosystem. Hence the government has not done anything to encourage the sector or fix the issues. Moreover the availability of domestic money needs to be improved for the start-ups.