Union Budget: More questions than answers

Union Budget presented by Finance Minister, Nirmala Sitharaman today left more questions against the expectation of answers that the street had expected in regard to the current economic slowdown. Union Budget was expected to be a boost to the consumption.

The government’s tight fiscal condition was known by the markets. A stretch in fiscal deficit to 3.8 per cent of the GDP was already discounted in the markets. Rally in the last two months was led in the direction of a direct booster dose to the economy.

The economic slowdown has been taking point since the second half of the calendar year 2018, led by Non-Banking Financial Company (NBFC) crisis. Low manufacturing, reducing investment, slow auto sale numbers, rising bad loans etc, have impacted the sentiments. Measures taken by the government such as corporate tax cuts, capital infusion in banks have given more focus. Hence, the current budget market had expectations to be a consumption booster. The rise in revenue is what has troubled the companies. It was evident from the Streets’ reaction that the expectations were different from what has been delivered.

The Budget speech has failed to give any such start to the consumption trigger. Changed individual income tax slabs could have come out with this boost. But its complexities such as, which regime to opt for, with exemptions or without them, will still be on the tax payers mind.

The current conditions in the global markets are also not very encouraging. After the Budget, the markets can further damage the sentiment in the domestic markets. Only hope that the market will take is, of the real growth that is, increased volumes and revenues.