While the Interim Budget 2019 did not have much to offer directly to the MF industry, the acting Finance Minister Piyush Goyal has proposed a number of measures to accelerate the growth of the economy. Here’s what MF honchos and experts have to say about the Union Budget 2019.
Sunil Subramaniam, Managing Director and CEO, Sundaram Mutual Fund
This was a balanced budget. This budget aims to highlight intentions of the Narendra Modi led government if they come to power again.
Overall, in my view, the budget is good for mutual fund industry as people will have more disposable income. Mutual funds have delivered better risk adjusted returns and investors are likely to put their money in mutual funds to achieve their financial goals.
Navneet Munot, Executive Director & CIO, SBI Mutual Fund
As expected, the budget kept its focus on rural, small and medium enterprises and middle-class households. While this is an interim budget and the actual realization of the visions (such as the changes in direct taxes in favour of the middle-class) will have to wait till the roll-out of the full budget post the general election, it does set a narrative. Some of the rural oriented schemes such as PM Kissan Samman Nidhi and Mega pension scheme are expected to be rolled out in FY19 itself and have seen the provision in FY19 revised estimates figure.
Some of the measures such as health insurance scheme, guaranteed income for small and marginal farmers, and mega pension schemes work towards providing a social security net and enhance the demographic potential of the economy.
Nikhil Kamath, Co-founder & Chief Investment Officer, Zerodha
To the industry at large, the budget remained a non-event; there is no clarity over stamp duty reform or the rationalization of STT. These two were the demands from the stock market at large. Exemption for income tax for the five lakh income basket is a welcome reform; this could put more money in the hands of the middle class, and aid the consumer and services industry at large.
Rahul Jain, EVP, Edelweiss Wealth Management
Overall, it is a positive and balanced budget for all the sectors concerned. As expected, it is set to enhance the rural economy and cheer the middle class. The higher exemption for tax payers will increase the purchasing power of the individuals.
G PradeepKumar, CEO, Union Mutual Fund
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.
Sampath Reddy, CIO, Bajaj Allianz Life
Despite being an interim budget, a huge benefit has been given on the personal taxation front for the middle class with tax rebate up to Rs.5 lakhs. Also, standard deduction has been increased from current Rs.40,000 per year to Rs.50,000. Besides that, TDS limits have been raised on various savings instruments. Individuals and the real estate sector are also expected to benefit from various tax advantages being provided to the sector. Overall, this tax saving will increase the disposable income in the hand of individuals and provide a boost to consumption. This is a positive for GDP growth too, with consumption growth slowing down a bit lately. We expect the consumer sectors to benefit, and the stock markets are already indicating that.
Saibal Ghosh, CIO, Aegon Life Insurance
The thrust towards income enhancement is positive for the consumption oriented sectors. The bond market will have to grapple with the resultant higher market borrowing. The bond market is faced with a mix of push and pulls factors. While the extremely muted headline inflation, stable external account dynamics and dovish bias in key global central banks augur well for the Indian debt market, the high gross market borrowing and the large emphasis on off budget borrowing requirement would prevent a material rally in the yield. From equity market perspective, budget would be seen as a positive event given the continued focus on income enhancing measures. Market’s focus will shift back to global cues, political developments and earnings trajectory.
