Union Budget 2019 manages the numbers with a few surprises

Union Budget 2019: The Union Budget for financial year 2019–20 (FY20) has used the revised numbers for FY19 as the benchmark as against the accounts, which showed a smaller size of almost Rs 1.5 trillion to almost retain the budgetary numbers for the coming year with a marginal improvement in the fiscal deficit number to 3.3 per cent.

While the speech has focused on the main thrust areas, benefits have been provided to specific sectors like affordable housing and electric vehicles. It has kept most of the tax structures unchanged. Customs rates have been selectively increased and petrol and diesel are to cost more as this is an assured revenue stream for the government.

A major takeaway is the bank recapitalisation (bank recap) amount of Rs 70,000 crore that has been announced. However, this would be through the issuance of securities, which means that once again it will not be a part of the budget but an offering through the recap bonds route. The cost of such an exercise would be witnessed through the interest payments that have to be made over a period of time. The infusion of such capital is welcome, as it will help banks to lend especially so as six of the public sector banks (PSBs) have come out of the prompt and corrective (PCA) framework and would require capital to grow.
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