Budget 2019 will help push consumption, drive investment: RPG Group’s Pramod Menon

By putting some amount of money in everyone’s pockets, the Union Budget will help drive consumption and thus investments said a senior executive of RPG Enterprises.

“This will drive consumption, especially in rural areas. And this will lead to investment from companies, who will make capital outlay to meet increased demand,” Pramod Menon, Group Chief Financial Officer of RPG Enterprises told Moneycontrol. 

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.

“With better consumption, capacity utilisation of companies will improve,” said Menon.

The $3 billion RPG Enterprises has interests in sectors such as auto (Ceat), infrastructure (KEC International) and speciality businesses (RPG Life Sciences).

“The Budget is good for a conglomerate like us,” said Menon. KEC is active in sectors like railways, real estate and civil, he added.

The Budget has given Railways its highest ever allocation, at Rs 1.58 lakh crore for the next financial year.

Goyal also announced that the operating ratio for the current fiscal has improved to 96.2 percent, and in the next financial year the aim will be to have it at 95 percent.

In the real estate 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 two crore.

“These are small steps, small reliefs. But this will help lift the overall sentiment of the sector and drive demand for civil business,” said Menon.

The Group CFO also pointed out the benefits for Ceat, which is a major player in the two-wheeler tyres segment. “We are well seeded in the segment. And the rural push from the Budget will help push demand for two-wheelers, in the villages. And the additional income in the hands of the middle class will also help,” he said.

Ceat has lined up an investment of Rs 1,500- Rs 1,700 crore for the next financial year and plans to set up a new plant that will produce passenger car radials.