The 2019 Union Budget not only turned out to be a pleasant surprise for middle-income class citizens and farmers in India but also the automobile sector. From increase in rebate for taxpayers with annual income of ₹ 5 lakhs, to small businesses getting the leverage to file quarterly returns, things are beginning to look better after the budget.
Here’s an overview of how the budget will benefit customers and the automobile industry alike:
Increase in purchasing power
The government has announced that citizens with an annual income of less than ₹ 5 lakhs are exempted to pay tax; it will give a significant boost to those belonging to the middle-income category. This will also increase their purchasing power.
For Automobile Industry:
Nowadays, cars have become somewhat of a necessity. As the income up to ₹ 5 lakh gets exempted from paying tax, the consumer spending is expected to receive a boost. The increase in purchasing power of a consumer will have a positive impact on the automobile industry as more people will start investing their money to acquire a new car, thus directly benefitting auto-companies.
Rise in the income of agriculture sector
Majority of the Indian population is employed in agriculture. The government announced that farmers owning up to 2 hectares of land will be paid ₹ 6000 annually, thus increasing their income. This in turn will help them invest more in machinery like tractors and two-wheelers to increase their productivity.
For Automobile Industry:
The support of providing direct benefits to farmers will add more purchasing power in the hands of the poor, push consumption and therefore, indirectly benefitting auto companies. The income support of ₹ 6000 per annum is positive for two-wheeler and tractor industries as it will provide a push in sales.
As the first step in making India drive on electric vehicles, the government lowered customs duty on import of parts and components to promote domestic assembly of electric vehicles. The government is also focusing on the use of clean energy in the transportation sector and is expected to soon announce a concrete plan of action with time-bound implementation. The proposed electric revolution by the government will provide much-needed impetus to the auto industry.
The 2019 Union Budget has been met positively across the country with most auto-industry spokesperson lauding the budget for encouraging growth and reaffirming their mission to bring electric vehicles to the market by 2019.