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Interim Budget 2019: A booster dose for consumption, investment
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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.
