In the run up to the Lok Sabha elections, NDA led government will announce vote on account or Interim Budget on February 1, 2019. And here is an insight, how the 6th consecutive budget announcement will play out for the Dalal Street:
Few of the announcements to ease the rural distress such as roll out of universal basic income (UBI) is most likely. Also, there will be sop for the salaried and low income group in the form of income tax exemption limit being raised to Rs. 5 lakh from the current threshold of Rs. 2.5 lakh. On these fronts, there can be seen some momentum in consumption stocks, but how far that sustains cannot be determined.
To the salaried there can be a higher standard deduction announced or more of investment avenues may provide section 80C benefits or the benefit as per section 80C may be increased beyond the current threshold of Rs. 1.5 lakh investment in a financial year.
Also, there remains not much headroom as the government aims to stabilize revenue. And on the corporate tax rate structure there shall be no change even after the FICCI has proposed uniform 25% corporate tax rate irrespective of the turnover.
There can be though a consideration on the enhancement of 80C limits to promote savings, increase in tax benefit to pensioners as well as more benefit may likely be announced for housing loan interest.
So, by and large consumption stocks may get a boost and within the category low ticket discretionary items will be provided an impetus. Also, rural themes can also be played with a short term perspective. All in all, the Union Budget 2018 which shall be the interim one will aim at extending a feel-good factor as it is BJP lost key state elections due to job and rural distress.
Also, populist budget announcement over and above the expected may not go well with the street as the overall fiscal math of the economy will be at a stake then.