"Acuité Ratings believe that the announcements in interim Union Budget 2019 would boost household consumption and strengthen the growth trajectory of the economy. The tax savings with the middle class coupled with the direct cash income for farmers and the large outlay for MNREGA are expected to strengthen the demand for consumer goods particularly in the rural areas. The automotive sector mainly the two wheeler and tractor manufacturers along with the FMCG sector are likely to benefit from such higher consumer demand. The budget has also provided significant tax benefits for fresh investments in the housing sector which will also support the infrastructure sector and the demand growth for cement and steel. The removal of custom duty on certain capital goods is expected to give a boost to private capital expenditure which has witnessed a slowdown over the last few years. This apart, the interest subvention of 2% for GST registered MSMEs will give further relief to those small enterprises who have been impacted by tight liquidity and increased cost of borrowings. The government has initiated a formal social security framework for workers in the unorganised sector through a monthly pension scheme for those over 60 years of age. Along with higher outlay for health and education, such a step is in the right direction to improve India's position in terms of Human Development Index (HDI). However, the expected step up in public expenditure can lead to slippages from the medium-term fiscal targets with a projected figure of 3.4% for 2019-20.
In the opinion of Acuité, the interim budget of 2019 has a significant growth orientation as also important steps towards better socio-economic balance; what is critical for the government at this stage is to maintain fiscal discipline."