What the union budget means for borrowers
The country watched with bated breath as Finance Minister Arun Jaitley announced the Union Budget for 2017-18. Coming on the back of the demonetization drive, this budget is important for a lot of reasons. And experts and analysts hailed it as a landmark budget that will be popular among various sectors.
In this post, let us examine what the budget means to borrowers across the country.
- Lower fiscal deficit target
In line with the fiscal consolidation roadmap of the government, the Finance Minister proposed to bring down the fiscal deficit to 3.2% of the GDP. Yet, it announced a 25% rise in capital expenditure. This indicates that the government is in the mood to increase expenditure but at the same time, while maintaining the fiscal deficit limit. This will help improve India’s credit rating as seen by international agencies. And when the government doesn’t dip more into borrowings, it allows the RBI to cut down interest rates. Borrowers will ultimately benefit when banks pass on rate cuts to borrowers.
- Higher lending limits
Over the last year, the Pradhan Mantri Mudra Yojana contributed significantly to providing credit to borrowers. But the Finance Minister went one step ahead and proposed to increase the lending limit for borrowers with a strong focus on the underfunded sections of the society. By doubling the lending target to Rs 2.44 lakh crore from Rs 1.22 lakh crore, the budget aims to provide easy access to credit for Dalits, tribals, backward classes, minorities and women.
- Affordable housing
The Union Budget spelt out good news for the real estate sector. With the announcement of affordable housing segment being granted Infrastructure status, the government has given a much-required boost to a sector which has been reeling from the impact of demonetization. This move can pave the path for developers to avail lower borrowing rates from banks. Experts believe that this could attract greater investment in the coming months.
- Hike in agriculture credit
The budget certainly brought back the smiles to the agriculture sector with the hike in Agriculture Credit by Rs.1 lakh crore. This increases the allocation target to a record high of Rs.10 lakh crore for the next fiscal. The objective of this measure, according to the Finance Minister, was to double the income of farmers in the next five years. In addition, farmers will also benefit from a sixty-day interest waiver on farm loans.
In a nutshell
The budget offered a lot of incentives to borrowers across various sectors. The real estate sector especially, can now put the woes of demonetization behind them. Meanwhile, with the enormous surplus available in banks, it is only a matter of time before the common man can avail loans at cheaper rates.