With the national elections coming next year, the finance minister Arun Jaitley has come out with a budget, which is designed to help the distressed farmers as well as rural areas and boosting the jobs, growth as well as private investment.
In this particular budget, the farmers of India as well as villagers are the biggest winners. The companies with the exposure to agriculture will also be hugely benefited by this budget. Apart from this, the bond investors will be the biggest losers. They will be affected negatively by this budget.
Let’s talk about the sectors, which will be positively affected by this budget and will emerge as winners.
It’s a long time, the farmers are protesting across the country. Now, the minimum prices offered to the farmers will be increased and in this budget huge investment is given to be spent in the agricultural markets. In this budget, more money is spent on the rural areas, including the irrigation projects as well as agriculture projects. The money is also spent by districts-state government to buy the solar power generated by the farmers, utilizing the solar powered pumps.
This budget will benefit the companies like Shakti Pumps India Ltd., KSB Pumps Ltd, Jain Irrigation Systems, Kirloskar Brothers, Waterbase Ltd., JK Agri Genetics, PL industries, etc., which are related to the farmers and agricultural system of India.
2) Health Care related companies
The new scheme of government known as National Health Protection Scheme, which aims to insure 500 million people for 5 lakhs rupees per year, will benefit the companies like Apollo hospitals as well as Fortis Health care Ltd.
3) Transport Companies
In this budget, a record spending is given to boost the infrastructure like roads as well as railways. Engineering and Construction firms as well as train wagon producer companies will be benefited under this initiative. The companies which will be benefitted will include L and T, NCC Ltd, Hindustan Constructions Ltd, IRB infrastructure, Dilip Buildcon , Cimmco Ltd and Titagarh Wagons.
4) Consumer Companies
The consumer goods companies like Hindustan Unilever Ltd, Marico Ltd and Britannia Industries will also be benefitted by this budget. This will ensure that the day labors will get the jobs as well as disposable income. Some of the other companies with rural exposure comprise of Hero Motocorp, L and T, Mahindra and Mahindra, etc.
As the gold is primarily demanded from the rural India, the companies like Titan, TBZ, PC Jewellers will be benefitted. This will insure the increase in the income of rural as well as farm incomes.
The government has pledged to expand the construction of regional airports. The firms like GVK Power and Infrastructure as well as GMR infrastructure will benefit from it.
Some of the biggest losers of this budget are the bond investors well as the financial companies, which will be affected in a negatively manner. Some of the negatively affected companies of this budget are as follows:
1) Apple and Samsung
The custom duty on the mobile phones is increased from 15 % to 20 %. This will reduce the returns for the Apple as well as Samsung companies. This will force them to have a local factory in India, instead of importing the mobile sets.
2) Bond Investors
The bond investors will be negatively affected by this budget. The fiscal deficit target (3.2 %) of India is missed. In the financial year 2019, a target of 3.5 % is kept for India. The big bond investor companies like state owned banks will be hit as the yield has gone higher by more than 96 basis points. The shares of companies like HDFC banks, ICICI banks, Axis bank, State bank of India, Punjab national bank, Bank of Baroda, will all be negatively affected.
3) Financial Sector
The government has decided to impose the long term capital gains tax on the equity investments. This has reduced the investor sentiments for the financial services companies like the mutual fund providers as well as life insurers. The companies like Reliance Capital Ltd., IDFC Ltd., Aditya Birla Capital Ltd., HDFC Standard Life Insurance Co Ltd., ICICI Prudential Life Insurance Co Ltd., General Insurance Corp of India, will all be negatively affected by this budget.
4) Defense Sector
As was addressed by Jaitley in the parliament, there will be industry friendly policies for the armed forces and promotion of defense production in the country. However, there was no sign of increasing the defense spending in this budget. Hence the companies related to defense like Bharat Forge, may not witness a boost.
To help the government pay for the ambitious health plans, which will benefit million of poor Indians, the existing health as well as education levy is increased from 3 % to 4 %. This will make everything slightly expansive.
Thus, we have seen that this is the budget for the poor as well as farmers. The rural population of India will be immensely benefited by this budget. On the other hand the bond investors as well as financial companies will be negatively affected by this budget.