Budget 2019 a positive for steel sector, although high interest burden a worry: Seshagiri Rao

MUMBAI: Enhancing liquidity in the hands of the rural consumers as well as the middle-income earning group is likely to have a positive ripple effect on the demand for steel, Seshagiri Rao, joint MD of JSW Steel said. Additionally, increased investment expenditure and sops doled out for the real estate sector is also likely to push up construction activities, benefit steelmakers, said Rao. However, Rao added that higher interest burden that will come from debt-funded expenditure assuming tax buoyancy will pose the question of reducing the burden to make the money available for redistribution. Among other announcements, finance minister Piyush Goyal announced the introduction of the Pradhan Mantri Kisan Samman Nidhi, under which marginal and vulnerable farmers with cultivable land of up to 2 hectares will be given Rs 6,000 per year; a scheme that will touch about 12 crore farmers and cost the state exchequer Rs 75,000 crore. Another scheme that the government launched was the Pradhan Mantri Shram-Yogi Maandhan Yojana under which both organised and unorganised sector employees with monthly income of up to Rs 15,000 are entitled to a pension of Rs 3,000 per month once they retire a the age of 60. The above two along with direct tax benefits equaling Rs 23,200 crore that entails full tax rebate for individual tax payers with taxable income of less than Rs 5 lakh as well as the raising of standard deductions from Rs 40,000 to Rs 50,000, will together lead to a rise in consumption of refrigerators, air conditioners, passenger cars and tractors, fuelling the demand for steel, said Rao. The government also extended the period of exemption from tax on notional rent from the current one year to two years, an impetus to the real estate sector that is likely to increase construction activities and hence demand for steel. Also, overall capital expenditure programme on railways is also pegged at Rs 1,58,658 crore, pushing up the demand for steel.

from Economic Times http://bit.ly/2BdkGOD