Budget Picks 2020

Budget Key Takeaway

In Union Budget, FM today introduced a new optional personal income tax system, a new tax dispute settlement scheme and unveiled a 16-point plan to revive growth in the country.

FM said this Budget will boost income and purchasing power of the people. This Budget spoke about the clean, reliable and robust financial sector for achieving the ambitious target of USD 5 trillion economies. This year’s Economy Survey projected economic growth to rebound and hit 6%-6.5% in the next financial year starting April 1.

Budget 2020 remains clearly focused on empowering the common man through several policy reform initiatives. With a specifically rural-focused, agri-centric budget, FM has sought to address the woes of rural India, especially the farmer class.

While the government remains committed to medium-term fiscal consolidation, any material strengthening in India’s public finances will likely be limited in the near term, and the debt burden will remain sensitive to changes in nominal GDP growth.

The Finance Minister has done away with the dividend distribution tax which is a big boost for companies. Added, extensive Infrastructure development plans like Delhi-Mumbai & Bangalore-Chennai Expressway and Railways Infra development will keep the public spending ticking with higher employment opportunities. This will make India an attractive investment destination.

Measures to attract foreign capital, undertake disinvestment (especially through LIC stake sale via an IPO), facilitate the consolidation of public sector banks and offer relief to MSMEs are some of the green shoots. It remains to be seen if such announcements are backed by an equally robust execution.

In a normal scenario, this budget would have been considered as a balanced budget, providing a tax benefit to the common man, corporate and focus on farmers’ incomes, but the situation required more than what meets the eye looking at the weakness in the market post Budget Speech.

However, we believe any big event provides opportunities in the market. Mentioned are the stocks can be bought for investments in the current situation which has strong future growth prospects.

Author: Mr.Siddharth Sedani, Vice President – Equity Advisory, (Investment Services), 1st Feb 2020

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