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Interim Budget 2019: A booster dose for consumption, investment
News
CRISIL estimates suggests that the Interim Budget could boost consumption and that, in turn, would impel the private investment cycle.
Important Facts
Factors contributing to consumer demand:
- According to CRISIL, PM Kisan scheme would boost profit from farming by 22%.
- The tax rebates for those earning up to ₹5 lakh, the ₹10,000 increase in standard deduction, and the hike in the TDS threshold on interest earned on deposits up to ₹40,000 would also boost consumption demand.
Impact on Demand of Goods:
- Sales of mobile phones, smaller-sized television sets and entry-level two-wheelers would be positively impacted
- Higher rural income will boost demand for packaged food items such as biscuits and bakery products.
- Focus on road building under National Highway Authority of India and Pradhan Mantri Gram Sadak Yojana will drive demand for commercial vehicles and tractors, respectively
Impact on India’s Economy:
- Private consumption, which accounts for over 55% of GDP, is expected to be a key driver for Indian economy
- India’s GDP could grow at 7.3% in fiscal 2020, given that monsoon is good and crude oil price is stable
- Higher demand will maintain the pressure on core inflation. CRISIL estimates indicate inflation could move up from 3.7% in fiscal 2019 to 4.5% in fiscal 2020.
