How Budget 2020 May Offer Respite To Various Sectors

Most analysts expect the government to increase its outlay for various sectors in a bid to revive the slowing economy.

Finance Minister Nirmala Sitharaman will present the first full budget of the Narendra Modi government’s second term on Feb. 1.

Here’s a sector-wise list of what analysts from Antique Stock Broking, CARE Ratings, Citi, Edelweiss Capital and IIFL Finance Ltd. expect from Budget 2020:

Agrochemicals

• Increase in the Mahatma Gandhi National Rural Employment Guarantee Act outlay and agri credit will aid all agrochemicals and fertiliser companies.
• Increase in the subsidy allocation of urea and complex will benefit all major fertiliser companies.
• Increase in allocation towards nutrient-based subsidy will aid the sector.

Automobile

• Scrappage policy will aid both auto and ancillary sectors.
• Lower individual tax rate will aid two-wheelers more.
• Higher infra and rural spending will aid two-wheelers and tractors.

Banks

• Allocation of funds to recapitalise lenders will aid public sector banks.
• Fiscal road map and borrowing program if higher will dent state-run banks.
• Higher tax deductions related to home loans will aid housing finance companies.

Also Read: Budget 2020: Further PSU Bank Recapitalisation Seen Unlikely

Building Materials

• Impetus for the real estate sector will aid pipemakers, tilemakers and sanitaryware makers.

Cement

• Higher allocation to infrastructure and low-cost housing will aid all cement makers.
• Removal of clean energy cess on coal will aid margins.

Also Read: BQ Survey: Cement Prices Rise To Five-Month High In January

FMCG and Consumer Durables

• Higher allocation to rural-centric schemes and reduction in personal tax will aid all FMCG and consumer durable companies.

Also Read: India’s FMCG Sector Growth Slows For Fifth Straight Quarter, Says Nielsen

Industrials

• Increase in investments in key infrastructure sectors will aid engineering, procurement and construction firms and heavy engineering companies.
• Increase in budgeted amount for metro projects.
• Increased allocation to the defence sector.

Infrastructure

• Higher impetus and spends on roads to aid toll and EPC companies.

IT

• Potential extension of special economic zone tax benefit sunset clause which is expiring on March 31, 2020.

Logistics

• Infrastructure status will aid all logistics companies.

Metals & Mining

• Reduction in import duty of coking coal and coke will aid steelmakers due to lower input costs.

Oil & Gas

• Inclusion of natural gas under GST will impact all gas stocks.

Pharmaceuticals

• Tax incentives for new plants will aid the entire sector.
• Weighted average deduction to R&D could be increased, aiding the sector.

Also Read: Budget 2020: Invoking Fiscal ‘Escape Clause’ May Allow RBI To Buy Government Bonds Directly

Real Estate

• Increase in deduction limit for homebuyers will aid the sector.