February 01, 2018 Budget Review 2018-19 - ICICI …

1 February 01, 2018 Budget Review201819-Rejuvenating Bharat for inclusive growth while balancing fiscal deficit2 Inthebackdropofgrowingexpectationsofapop ulistBudgetcoupledwithapprehensionsonimp ositionoflongtermcapitalgainstaxonequiti es, EaseofLiving ,amidpressureonexistingresources,theFina nceMinisteremphasisedonincreasingexpendi tureoninfrastructuredevelopmentincluding roads,airports,railways, , , ,withhostofincentives,includingloweringt hecorporatetaxrateto25%forentitieswithtu rnoverlessthan| ,ataxrateof10%wasimposedonincrementalgai nswitheffectfromJanuary31,2018foranequit yholdingperiodofgreaterthanayearoncapita lgainsexceeding| ,theapprehensionoverLTCG washandledinapragmaticwayasitwasintroduc edwith grandfatheringclause ,therebydispellingtheinvestors ,indeed,seemstobeaprudentmixofthrustonup liftingruralmasses, : ~|35000crore(revenueaccountedforonly11mo nthsduetospilloverimpact).

2 , ,thereisamarginaldeviationfromthepreviou sFRBM target,thegovernmenthassticktoitsconsola tionpath. Ontherevenuefront, | ( | )followingbettercomplianceinGST(E-waybil l).Additionally, | , |1,00,000croreinFY19E Ontheexpenditurefront,governmentfocusrem ainsonremovingruraldistress,improvinginf rastructureandeaseoflivingthroughbetterd evelopmentexpenses( |5,90,000crore). (with~50crorebeneficiaries)providingcove rageupto| ,incometaxforcompanieswithannualturnover upto|250crore(inFY17)hasbeenreducedto25% whichcoupledwithotherincentiveswillhavem ultiplierimpactontheemploymentgeneration . Finally,wealsohighlightthatthoughgovernm enthasintroducedLTCG insymbolicway(revenuesof~|20,000croreinF Y19E),itcouldactaskeycatalystinchanneliz ingresourcestowards easeofliving Team At Your ServiceBudget 2018 -19: Rejuvenating Bharat for inclusive growth while balancing 3 Deal Team At Your ServiceGovt s estimated fiscal position from our ParticularsFY15 AFY17FY18 REYoY (%)FY19 BEYoY (%)FY19 IEYoY (%)CommentsDirect Directtaxcollectionsgrowthtoremainbuoyan tnextfiscalledbyimprovedbusinessenvirone ment and better compliance Indirect Taxes & TherevenuesforFY18 REarelowerby| to rampup to over |50000 crore FY19IE Gross Tax Less.

3 State Shares Net Tax Non Tax RevenuesDividend123017106433( ) Webelievethegovernment sdividendestimatesforFY19 Eseemconservativeandleaves scope for positive surprise in terms of total dividend receipt for FY19 EEconomic services10169788813( ) 85000( ) Others4811740728( ) Total Revenue Capital ReceiptsRecovery of Loans1763017473( ) 12199( ) 11000( ) 80000( ) 100000- WitharobustpipelineinFY18-19E,webelievet hegovernmentwouldagainexceedits disinvestment target set fo FY19BE Total 92199( ) 111000( ) Total Scheme On Revenue On Capital Exp other than On Revenue On Capital Account4331529350( ) Interest Total Webelievethatoilsubsidynumbercouldincrea seby|10-15,000crorefrombudgetedtargetof| 24,933croreassumingoilpricesatUS$ ,webuild in additional expenditure of |12,000 crore Fiscal Primary 48481( ) 46542( ) GDP Fiscal deficit as % of ,thegovthascontinuedtofocusonfiscalconso lidation path (from to )

4 Alongwith removing rural distressGovernment Revenue & Expenditure4 Maintaining fiscal prudence with improved quality of :BudgetDocuments,MoF, - deficit trend (%)Fiscal deficit (Rs. '000 cr) - LSFiscal Def icit as % of GDP - (%)Trends in tax receipts (as % of GDP)Gross Tax ReceiptsDirect TaxIndirect Tax40424142416058595859020406080100FY16F Y17FY18 REFY19 BEFY19 IEShare of expenditureScheme ExpOther Exp1138771022007201650184390053694631812 2136413560410709281869565895319840754386 2426310138097134572850106383654667417654 42202795604000080000120000160000 Rural DevelopmentTransportEducationAg ricultureHealthUrban DevelopmentSocial WelfareCommerce &IndustryMajor items of expenditure (|Crore)FY17FY18 REFY19BE5 Aiming to double farm income by 2022; emphasis on income insuranceSource: Ministry of Agriculture , Research (cropinsurance)andefficiency(irrigationi ncludingmicro-irrigation)schemes,itlayss pecialemphasisonaugmentingfarmincomethro ughremunerativefarmgatepricestherebytarg eting incomeinsurance EmphasishasalsobeenplacedonfixingMSPpric esatamarkupof50% ,NitiAayogandstategovernment Toaugmentfarmincome,italsoaimstopromotea lliedactivitieslikeaquaculture,animalhus bandry,etc,whileatthesametimesavecropwas tagesthroughrequisitestorageandagro-proc essingunitsUnionBudgetalsoemphasisesonex pansionofthee-Namnetworkwithall585mandis settointegratebyFY18 Eandupgradationof22,000ruralhaatsintoGar minAgricultureMarkets(GrAMs)(corpusalloc ationat|2,000crore).

5 Withtheaimofpromotingalliedactivitiesnam elyaquaculture,dairy,animalhusbandry,fis heriesetc.,governmenthasproposedcreating aseparatefundamountingto|10,500crore(cap italinvestmentandworkingcapitallimits).O ntheriskmitigationfront, ,allocationhasbeenincreasedto|13,000cror ewiththeaimofincreasingcoverageto~50% ,intheirrigationspace,totalallocationund erPMKSY isbeingincreasedto|9,429crore,up28%YoY,w ithspecificallocationtoMISat|4,000crore, up18% |11lakhcrore,up10% |1,200croreGovernmenthasgivenbigboosttof oodprocessingsectorwithallocationtoPradh anMantriKrishiSampadaYojanaat|1,400crore ,up96%YoY6565646260222323242688889555550 10203040506070FY12FY13FY14FY15FY16%Agric ulture & Allied Services GVA break upCrops (Foodgrains and Horticulture)LivestockForestry and LodgingFishing and aquacultureThus,UnionBudget2018-19haspre sentedaholisticapproachtowardsupliftment ofruralmassesanddoublingoffarmincomewith specialemphasislaidonriskmitigationmeasu res, ,itpromotesalliedservices& Scheme (PMFBY)

6 | crore3,10011,05010,70013,000 Increase YoY %32256-321 Irrigation (PMKSY)| crore5,3005,1347,3929,429 Increase YoY %-34428 Micro-Irrigation (MIS)| crore1,8002,3403,4004,000 Increase YoY %61304518 Sub-Mission on Agri Mechanization| crore1393585251,200 Increase YoY %15847129 Institutional Credit Target| lakh YoY %661110 Allocation to various agriculture schemes (Union Budget 2018 -19)Higher allocation towards key development schemes to improve ease of living!!!6 Thegovernmenthastakeneffectivestepstoimp rovetheeaseoflivingmainlyledbyincreasedb udgetaryallocationtowardstheMinistryofRo ad,Transport&Highways( |70,544crore),railways( |53,060crore)andurbandevelopment( |50,868crore).Consequently, |2,43, :Budgetdocuments, ernment' s allocation to dev elopment s chemes (| crore)FY15FY16FY17FY18 REFY19 BEYoY P ra dha n Ma nt ri Gra m Sa da k Yoj a na (Rura l roa ds ) Mi ni s t ry of Roa ds , Tra ns port a nd Hi ghwa P ra dha n Ma nt ri Awa s Yoj a na - Gra mi P ra dha n Ma nt ri Awa s Yoj a na - Urba (Shipping & Power) Other key Infrastructure announcementsReal Estate1)ToestablishadedicatedAffordableH ousingFund(AHF)inNationalHousingBank,fun dedfromprioritysectorlendingshortfalland fullyservicedbondsauthorisedbythegovernm ent2)Toconstruct51lakhhouses(51lakhinFY1 8aswell)forruralareasunderPradhanMantriA wasYojana-Gramin,thegovernmenthasmadeabu dgetaryallocationof| 21000 crore.

7 For urban areas, the assistance has been sanctioned to construct 37 lakh housesRoadThegovernmentisplanningtoconst ruct57000km(59150kminFY18)ofruralroadsun derPMGSY,andaward35000kmofroadsunderBhar atmalaworth| ,NHAI willconsiderorganisingitsroadassetsintoa specialpurposevehiclesanduseinnovative monetising structures like toll, operate and transfer (TOT) and infrastructure investment funds (InvITs)InfrastructureUsingtheonlinemoni toringsystem'PRAGATI', , projects worth | lakh crore have so far been facilitated and fast trackedPowerUnder Saubhagya Yojana, 4 crore poor households are being provided with electricity connection free of chargeUrban Infrastructure1) The government is looking to expand airport capacity by more than five times to handle a billion trips a year under a new initiative - NABH Nirman(Civil aviation)2)RegionalconnectivityschemeofU deDeshkaAamNagrik(UDAN)initiatedbythegov ernmentlastyearshallconnect50unservedair portsand31unservedhelipadsacross the countryPublicThe government would initiate monetising select central public sector enterprise (CPSE) assets using InvITs from next yearRailways1) To increase electrification of railways by 50% YoY to 6000 km2) Procurement of electrical locomotive increased 72% YoY to 573 units for FY19 ERail capital expenditure outlay Focus on modernisationSource:BudgetDocuments,MoF, Investment ,reducedGBSdependencyDespitemergerwithth eCentralBudget, |146500comparedtoFY17-18revisedestimateo f| !

8 !!Approximately69% ,higherelectrificationwouldleadthewayfor lowerfuelexpensesresultinginimprovemento f320bpsinoperatingratiofrom96%inFY18(RE) (BE).Thefocusofcommissioning/additionofn ewlines(1000km) ,thebudgetedestimatesreflectIRcommitment stoprocurethesame53108647699352010993513 1000120000146500020000400006000080000100 0001200001400001600002013-142014-152015- 162016-172017-18 (BE)2017-18 (RE) 2018 -19 (BE)| CroreTotal Capital Outlay2817431624376084523255000400005306 0970915350168451212514000109001150015225 1779539066525796200069100819400200004000 060000800001000001200001400001600002013- 142014-152015-162016-172017-18 (BE)2017-18 (RE) 2018 -19 (BE)| CroreGross Budgetary SupportInternal GenerationExtra Budgetary ResourcesShift offocus from GBS to EBR2017-182018-19 Rolling stock251943200727%New Lines (Construction)

9 229862849024%Track renewals83101145038%Doubling1795717359-3 %Electricfication3452630283%Gauge conversion367440169%Signalling & other23302025-13%2017-182018-19 Rolling stockDiesel locos (in nos.)290122-58%Electrical locos (in nos.)33457372%Coaches (in nos.)4495516015%Track machines (in nos.)7652-32%New Lines (kms)800100025%Track renewals (kms)360039008%Doubling (kms)1800210017%Electricfication (kms)4000600050%Gauge conversion (kms)900100011%Capital Augmentation outlay (in crore)Financial outlayOutput/DeliverablesCapital Augmentation outlay (in quantity)% change% changeEfficient Railways -Execution at the :BudgetDocuments,MoF, 1lakhcroreoveraperiodof5 years. Allocatedacorpusof 20, by 2020 is on trackThroughputisproposedtobeenhancedby1 0% against 2,800 km in 2016-17 Inthefirstphase,SouthEasternRailway, throughputAt least 25 stations are expected to be awarded during 2017-18 for station redevelopment.

10 500 stations will be made differently abled friendly by providing lifts and ,430escalatorsat167stationsand 279 lifts at 122 stations have been providedProposed to feed about 7,000 stations with solar power in the medium term. A beginning has already been made in 300 stations. Works will be taken up for 2,000 railway stations as part of 1000 MW solar missionTotal megawatt (MW) solar roof top capacity has been installed on 350 stations including major stations like New Delhi, Old Delhi, Jaipur, Secunderabad and Kolkata. Order has been placed for 37 MW solar roof top capacity by Zonal Railways/PUs (covering 250 stations) CoachMitra facility,asinglewindowinterface,toregist erallcoachrelatedcomplaints and requirementsThefacilityshallbeextendedto allon-boardhousekeepingservice(OBHS)trai ns(1000)in2017-18.