Union Budget good, but subject to assumptions: JSW Steel's Seshagiri Rao

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26 Aug, 2025 12:21

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Union Budget 2019 is a good budget, said JSW Steel's Jt Managing Director and Group CFO Seshagiri Rao. But, he added, it is subject to the assumptions coming true.

Rao pointed out that government announcements will lead to benefit of up to Rs 1 lakh crore for up to 15 crore people. "This is a good thing. As against benefiting a small group of people, the government is distributing money in a way that it stimulates consumption of a large number of people," he said.

Finance Minister Piyush Goyal announced a series of benefits through the Union Budget on February 1. While increasing tax rebate and standard reduction that will help the salaried class, the Budget also provided Rs 6,000 a year to 12 crore farmers. A mega pension scheme was also announced for workers in the unorganised segment.

Higher expenditure

Rao pointed out that the government expenditure for the 2020 financial year is higher by Rs 32,000 crore, as compared to the 2019 outlay.

The increased expenditure, he said, is good for the steel industry. The benefits for the real estate sector will drive demand for long steel products that are used for construction, Rao added.

Among multiple measures for the housing sector, the Budget has allowed rolling over capital gains on the investments made in two residential houses, from one currently. These are for houses of up to Rs 2 crore.

Assumptions

On the other hand, Rao said that the executions of the proposal will be subject to the assumptions coming good, especially given the outlook for nominal GDP growth in the next financial year.

The government expects nominal GDP to grow by 11.5 percent in FY20, slower than the 12.3 percent expected in the present financial year.

At the same time, the government expects direct tax and indirect tax receipts to grow by 13.26 percent and 12.2 percent, respectively. "That is a high tax buoyancy of 1.17 percent. That has to come true," said Rao.

The government is also hoping for a higher non-tax revenue, in the form of better dividends from the Reserve Bank of India and public sector units.

Rao also pointed out that interest outflow on government debt is expected to increase — as percentage of its total expenditure — from 23.6 percent to 24 percent.

"The interest outflow is expected to be 24 percent of the total expenditure. And then there is the establishment costs, including salaries, at 20 percent. That is a total of 44 percent. This has to come down so that the Government can spend more on welfare measures," said Rao.

Thus, for the government to dole out benefits to the people, it is important that it keeps its expenditure at check and maintains its tax revenue growth.