Government's Interim Budget: Here Are The Winners And Losers

INSUBCONTINENT EXCLUSIVE:
The government will breach its fiscal deficit target for a second year.Prime Minister Narendra Modi has delivered an interim budget likely
to boost the government's popularity ahead of polls that are now just months away.The budget includes big announcements such as a major
income support scheme for farmers and a new pension program for workers
It also includes a number of smaller measures that could prove popular, including tax relief for the lower middle class.Delivered by Finance
Minister Piyush Goyal because Arun Jaitley is in the US for medical treatment, the budget speech was heavy on praise for the government's
programs over the last four-and-a-half years -- sometimes prompting boos from the opposition.Farmers, as well as companies with exposure to
rural India and middle class taxpayers, seem to be the clear winners here at the expense of the country's fiscal deficit.WinnersFarmersAs
expected, PM Modi's administration has come out with a massive spending plan for the country's farmers: A Rs 75,000-crore ($10.5 billion)
farm income support program
Farmers with less than two hectares of land will receive Rs 6,000 ($84) each year
That's likely to assist about 120 million small and marginal farmers, the government said
Agriculture-focused companies such as Shakti Pumps India, Jain Irrigation Systems, KSB, Kirloskar Brothers, Avanti Feeds, Waterbase, JK Agri
Genetics, PI Industries could benefit.Tax payersIncome tax payers earning up to Rs 5,00,000 will get a full tax rebate, while those earning
up to Rs 6,50,000 will not need to pay tax if they invest in the country's provident funds and prescribed equities
Mr Goyal said this could benefit as many as 30 million middle class taxpayers
Anyone earning more will be taxed at the prevailing rates.Rural IndiaIncreased spending on the animal husbandry and fisheries sectors and an
interest subvention plan for small-and-medium-sized businesses could benefit companies with exposure to rural India
That includes motorcycle companies and others with interests in the country's heartland including Mahindra Mahindra and Larsen
Toubro.WorkersA second big announcement in the budget was for a "mega" pension program for India's informal sector workers with income below
Rs 15,000
The vast majority of the country's workers are employed in small enterprises, often with little job security and no social security
benefits.Real EstateThe Bombay Stock Exchange's real estate index climbed as the government reiterated its push for affordable housing and
announced new measures that could boost home-buying
Mr Goyal promised a home for every person in India, a country of 1.3 billion people, and proposed to allow investments of as much as Rs 2
crore from capital gains for buying two residential houses, compared with only one at present
He also proposed waiving tax on the notional rent payable on a second self-occupied house
Companies that could benefit include Oberoi Realty, Prestige Estates Projects and DLF.Auto-makersThe SP BSE Auto Index jumped as much as 5.3
per cent, its biggest intraday advance since May 2014, as Goyal delivered his speech
Maruti Suzuki India, Hero MotoCorp and Bajaj Auto gave the biggest boost to the benchmark SP BSE Sensex.PM ModiIn his government's budget,
two major initiatives -- a farmer income support plan and a pension plan -- bear the name of the prime minister's office
Although the farmers' plan was expected, the pension announcement was not
And both could go some way to boosting Modi's popularity ahead of elections.LosersBond holdersPM Modi's government will breach its fiscal
deficit target for a second year, with the budget gap estimated at 3.4 per cent
Bond holders could get hit if Moody's or SP downgrade the country's credit rating
Moody's has already said the government's budget includes no new policies to increase revenues."Ongoing slippage from the government's
budgeted fiscal deficit targets over the past two years, and our expectation that the government will face challenges meeting its target
again this coming fiscal year (ending March 2020) does not bode well for medium term fiscal consolidation,'' said Gene Fang, an associate
managing director at Moody's Investors Service's sovereign risk group.Sovereign bonds slid after the government detailed
higher-than-expected borrowing numbers for fiscal 2019-20
The yield on the most traded 2028 bond was up 14 basis points to 7.63 per cent as of 2:43 pm in Mumbai.Opposition partiesPM Modi's
administration has unleashed an interim budget full of populist goodies for farmers, the middle class and small-and-medium-sized businesses
Regardless of whether the government implements any of this with the election due by May, the announcements could still hurt opposition
parties as they head out on the campaign trail with only manifesto promises to offer voters.Farm labourersRural labourers who toil on farms
but don't actually own any land will not benefit from the government's big spending plan for farmers
These workers are often already desperately poor, while most state-initiated plans to boost prosperity in the countryside tend to focus on
land-owning farmers.''It tends to ignore the landless farmers who will not be entitled to the annual support of Rs 6,000,'' said Jaijit
Bhattacharya, president of the Centre for Digital Economy Policy Research in New Delhi.DefenseIn dollar terms, the country's defense
spending is less than it was last year because of depreciation
This year's budget allocates about Rs 3.05 lakh crore ($43 billion) for defense spending, most of which is eaten up by recurring costs that
squeezes the money available for new arms purchases.Last year, the government allocated about Rs 2.85 lakh crore ($40 billion)
But the rupee has depreciated over the past year and on February 1, 2018, Rs 2.85 lakh crore amounted to roughly $44.5 billion
That stagnation matters, because India is one of the world's largest weapons importers
Effectively, the government is compensating for depreciation and inflation, and will likely still sell this as an increase in defense
spending.Find LIVE Budget 2019, updates, latest news, videos, key highlights, reactions, tax and policy changes here
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