Sector-wise key expectations from Budget 2017

Hike in income tax slab limits and reduction in corporate tax rate may be the highlight of Budget

With over a week left for Finance Minister Arun Jaitley to unveil the Budget 2017 on January 01, industry experts are being vocal about the expectations that they seek from the NDA-led government’s fourth Budget under the current term.

“We believe that the government is likely to take corrective measures which would offer remedy to the demonetisation wounds. In our opinion, increase in individual income tax slab limits and reduction in corporate tax rate is expected to be the highlight of the Budget 2017 in order to revive the consumption cycle,” said brokerage Angel Broking in a pre-Budget research note.

Below are sector-wise expectations from Angel Broking:

Auto

Auto sector was expected to report strong growth numbers in fiscal year 2017, however, the sudden cash crunch following demonetisation impacted the industry severely with November 2016 and December 2016 sales showing weakness across the segments. The industry expects the government to slash personal income tax rates so that consumers may have more disposable income to boost auto demand. It also expects the government to reduce excise duty on SUVs.

Banking sector

The Banking sector has been undergoing a painful stage in India. While large scale defaults have weakened the balance sheet of banks on one hand, lower credit growth is exerting cost pressure on the other. The brokerage expects the Budget to allocate more funds to infrastructure and focus on capex revival. “Higher allocation to infrastructure, housing and urban development will ease the stress level of corporate India’s balance sheet,” it said. The brokerage also wants government to hike capital infusion in public sector banks to improve their capital adequacy position.

FMCG

FMCG sector has not witnessed any significant revenue growth for the last two years owing to slowdown in rural demand. Demonetisation has only aggravated the pain. The brokerage expects more funds into marquee programs such as the Pradhan Mantri Krishi Sinchai Yojana, Rashtriya Krishi Vikas Yojana, Pradhan Mantri Gram Sadak Yojana etc. It also wants the government to increase the income tax slabs to leave more money in the hands of consumers. read more.