Budget 2019- Analyzed by Top Fund Managers

Mutual Fund

Rahul Baijal, Sundaram Mutual Fund Manager (Equity)

From the aspect of market, it is an optimistic budget. It has successfully targeted sectors like- middle class, working class and rural class. In this budget, housing sectors has been benefited of capital gains on notional rental income, middle-class sections has been given rebate, pension scheme has also been positively affected and the big rural farmer package has come down as expected. 

G Pradeepkumar, CEO of Union AMC

“This is a dream budget for the middle class and for farmers. With the increase in exempted income, increase in standard deduction, increase in limit for TDS etc. we can expect more disposable income in the hands of the people. The outlay for farmers should go a long way in reducing the stress in the agriculture sector. Mutual Funds can also expect more inflows because the salaried class can use the extra disposable income for investments. Overall, the budget is very positive for the stock markets”, as said by the CEO of Union AMC.

Kumaresh Ramakrishnan, Head-Fixed Income, DHFL Pramerica MF

As 2019 is an election year, Budget 2019 is a provisional one. As a result, details on capex related spending was not missing. 

It is assumed that the nominal GDP growth of FY 20 is more or less same as of the previous year which is at 11%. Over the same period, expenditure is expected to grow 13.3% (14.7%) and revenue receipts which is 14.30% (20.51%)growth. Both the expenditure and revenue growth as assumed for FY 20 are less than the numbers of the current years. 

It is assumed that the non-tax revenue which includes dividends and disinvestments from Banks/PSUs and RBI are in sync with the numbers of the current year. It has been projected that in the current year, the direct tax collections will grow a little low. Also, it has been estimated that GST collection is 18%, which is quite positive as compared to current fiscal numbers.

This budget has sops for farming sector with fiscal concession of Rs. 750 bio for FY 20 and Rs. 250 bio for FY 19. The salaried class with low income up to Rs. 5 lakhs will enjoy some tax rebate implications.As a result, there has been a fiscal deficit for FY 19 (which was expected to be 3.3%) and FY 20 is now at 3.4% (which was expected to be 3.1%), which is higher than as expected.

In July 2019, the full budget will be out which will have comprehensive details on revenue mobilization and spending. If some spending which is excluded currently and is included in the July budget, the fiscal deficit numbers can face some heat for FY 20.

For current fiscal (by Rs. 37000 crore) and for FY 20, the borrowings are higher than the expected fiscal deficit. A close term negative impact on bond yields from the mid to the long end is likely to be affected by higher govt borrowing.

NS Venkatesh, Chief Executive of AMFI

The budget is blended with fiscal caution and pro growth. Some of the progressive steps such as- unorganized sector workers benefited with pension scheme, Pradhan Mantri Kissan Samman Nidhi to support the distressed farmers and moving the income tax exemptions limits up are highly acknowledgeble.

With the raise of savings for the salaried sections and additional money with the farmers will benefit the sector of mutual fund. Also , to ease up the difficulties faced by the depositors, steps has been taken to raise the TDS limit on the deposits.

Arvind Chari, Quantum Advisors, Head Fixed Income and Alternatives

There has been a fiscal deficit for FY 19 (which was expected to be 3.3%) and FY 20 which is now at 3.4% (which was expected to be 3.1%). 

An assumption on tax and GST growth of 18% for FY 20 will be very difficult to achieve. 

As compared to market assumptions, bond markets may affect in a negative way, This is because market borrowing numbers are higher for the current and the next fiscal year. The MPC and the RBI may not change the interest rates seeing the aggressive compromise, fiscal compromise and potential inflationary nature of the budget. 

Jinesh Gopani, Axis Mutual Fund Head-Equity

“Generally, the budget is good from consumption point of view. There were a lot of tax benefits, lot of benefits to the farmers and indirect tax benefits in real estate”, said by Jinesh Gopani.

Lakshmi Iyer, Kotak Mutual Fund- Chief Investment Officer of debt and head of products

It is not a negative budget. It is assumed that the market will be unchanged as expected from the market’s perspective. The market is trying cope with the breakup of the money allotted. The target of disinvestment has been assumed to be Rs. 90,000 crores.

Right now looking for the fiscal deficit number which will affect the monetary policy. Presently, markets will be in a state of uncertainty . The government has not gone crazy with the fiscal number. But the global macro affect is in a positive way. For the investors, it is better to keep in investing in the short duration bonds.

Akhil Mittal, Tata Mutual Fund- Senior Fund Manager (Fixed Income)

In Budget 2019, the FM has said that the FY 19 fiscal deficit was at 3.4% of GDP while FY 20 has fiscal deficit at 3.4% of GDP (probably at the cost of capex expenditure). The budget has distanced Fiscal consolidation because of potential inflationary pressure and doubt on generation of revenue

The budget has given attention to agricultural issue via PM Kissan Samman Yojna and allocated Rs. 750 bn which donot affect teh fiscal calculation in a broader way.

The targets of Disinvestment and GST collection for the FY 20 has been really overwhelming.

It is hoped that the budget minimizes the probability of rate cut in the future. Also, with respect to fiscal slip, RBI is expected to highlight the probable upside inflation risk.

It is hoped that the bond yields will be in a pressure. New 10 yr g-sec are traded within 7.20% to 7.60% in the medium term and will be affected by the incoming micro data is expected.

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