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6 Mins Read

Budget 2020: Desperate Measures for Desperate Times

For us Indians, the annual ‘budget’ is a huge ritual. Starts with a long-kept tradition of cooking something sweet (because auspicious occasions call for a whetting of the sugar craving), and a tirade of expert reviews and opinions about what the fiscal year is going to be like. 

So, this year, we asked both our advisory teams and the public for their views on the upcoming budget. This ‘outlook’ marries the expert’s perspective, with expectations from the average man (which we have culled from our Twitter poll).

What Our Advisors Say:

For an economy that is driven by sixty percent consumption, a demand slump is bound to result in a country-wide slowdown. So, it is obvious that any supply-side push initiated through monetary policy will have limited impact and fiscal stimulus will be key in addressing the demand side problem. That being said, the budget initiatives announced this year will be critical in determining where the economy will be headed.

Ailing with credit crises, weak investment, sluggish production, soaring unemployment, muted monetary policy transmission, and low tax collections, the well-being of the Indian economy is currently at risk.

All eyes are now on the budget to directly tackle these underlying vulnerabilities by focusing on the revival of all-inclusive demand. This could be achieved by inducing spending amongst consumers, businesses and government, alike.

To induce such a large scale push, fiscal slippage is unavoidable and is even acceptable in the short term to revive long-term growth. However, it is only worthwhile if the end justifies the means.

Here are the highlights of what could be announced this budget –

  • Tax relaxation in areas like capital gains and dividend distribution such that income increases where there is spending power. This can then have a more significant effect on consumption through additional disposable income.
  • Capital investments in labor-intensive sectors like infrastructure and construction. Capex in these industries could help kick-start the investment and employment engine.
  • Reduce tax burden and provide regulatory relief to distressed, debt-ridden sectors like automobile, realty, and telecom to enable better credit transmission as lenders and borrowers gain more confidence about their financial stability.
  • Materialisation and faster processing of tax credits and simplification of provisions announced for SME ventures to bolster investor sentiment and skilled employment.
  • Timely and targeted disinvestment initiatives of PSUs could be used as an efficient source of revenue to cushion fiscal deficiencies.

Yes, the fiscal math of these initiatives looks challenging but desperate times call for desperate measures.

What Our Twitter Followers Say:

20% Indians don’t care about the budget?

Surprising, but true. This is what we found out in our “Big Budget Poll”.

Given the state of the economy and the fact that PM Narendra Modi has promised to deliver a 5 trillion dollar economy by 2024, this budget becomes all the more important for all of us.

Why Twitter? Because it is where all the pro & anti-BJP voters are active these days. Hence we thought of taking the opinion of both, to gauge the mood of the nation.

In the first question, we wanted to understand the significance of the budget on young professionals. The findings are as follows:

  • 41% of the respondents follow the budget for tax concerns.
  • 23% of the respondents follow a budget as it impacts their expenses. These may be women at home or people in the lower-income brackets.
  • But surprisingly 20% don’t care about the budget.

budget 2020

Around 38% of our followers said they were hoping for a tax relaxation this year (news of this has been doing the rounds in the media). But on the flip side, around 46% also said that they were not optimistic about any positive change.

The 20% number still had us reeling though. The next question was posted to understand why this particular section of our society did not care about the budget at all.

The reasons were of a varied nature:

  • The respondents were either in college and didn’t have taxes to pay.
  • Some may have no expenses to manage, hence they may not be concerned. Like affluent homemakers.
  • It’s also quite possible that some may be earning below taxable levels. They may be living with their parents and have no expenses to manage.

Now, we would like to take a moment here to mourn the apathy of those who do not think they are affected by the annual budget. Even if you are in college, the budget affects how you spend on the goods you consume daily.

As a refresher, here is the list of items that got expensive last year:

  • Petrol and diesel
  • Cigarettes, hookah and chewing tobacco
  • Split air-conditioners
  • Loudspeakers
  • Digital video recorders
  • Imported books
  • Raw materials for the manufacture of soap
  • Optical fiber

Some of these are, of course, consumed by the young generation. Others are the headache of the parental generation. Speaking of whom, we thought we’d poll them to understand how they felt about paying tuition fees and the taxes levied on them.

Tuition fees are currently clubbed under the Section 80C deductions but as many parents know, the tax deductions on these are not in line with the amount most of us are often expected to pay. This sentiment was echoed pretty generously as a whopping 65% of our pollsters said they would like to see a 100% waiver on tuition fees.

Whether this happens or not remains up in the air as of now, but more deductions would generally be welcome in a country where only 33% of people save money on a regular basis for their retirement and other goals. Lower taxes on long-term and dividend investments would be a big favorite too, so we went ahead and asked our friendly Twitterati the same question:

This was an important question in our survey. 2019 saw a fall in consumer demand for the first time in 4 years. As per the “Key Indicators: Household Consumer Expenditure in India” survey conducted by the National Statistical Office (NSO), the average monthly spending by an individual fell to Rs 1,446 in 2017-18 from Rs 1,501 in 2011-12, down 3.7 percent (Source: Economic Times). This was attributed to a fall in rural demand – the survey stated that rural Indians bought fewer consumer items, barring milk and milk-related products. Important to note is the fact that the amount of money spent across the nation – even the urban sector – on essential food items like salt, oil, ghee, etc. declined.

A fall in rural spending points to many factors like lack of jobs, increasing poverty, and a slowdown in the farm sector. Sadly, these are not the people on our survey and we don’t know what they think of the budget. Harking back to what our advisors said, we need more capex in the labor-intensive sectors to kickstart the investment and employment engine again.

We’ll just have to wait and see, won’t we?


So, far our ‘Big Budget Poll’ has seen five questions and over 2000 votes. We’re still listening to what you have to say about Budget 2020, so you can leave your comments here, or follow Siddhant Raizaada on Twitter to take part in his survey.


The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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