UNION BUDGET - Knight Frank

1 GLOBAL UPDATE | INDIA UPDATE | INDIA INFRASTRUCTURE & REALTY UPDATEMONTHLY UPDATE JANUARY 2018 UNION BUDGET2018-19 BIG THRUST ON INFRASTRUCTURE & SOCIAL SECTOR DEVELOPMENT 32 RESEARCHMONTHLY UPDATEGLOBAL UPDATEBLOODBATH AT THE DOWEven though the Dow Jones Industrial Average recovered by 7 February, 5 February 2018 was one of the worst days the US markets have seen since 2011. The fall in the markets was largely on the back of a healthy wage growth, which is a good thing, but it also signals that a rise in inflation is in the offing. This coupled with the fact that the yield of 10-year Treasury notes jumped to its highest point since early 2014. The fall was so severe that at one point the Dow fell over 1,500 points to close the day down 1,175 points, a fall of in a single RATES IN THE OFFING: BANK OF ENGLANDEven though the Bank of England has maintained status quo on interest rates, it has given enough indications that a rate hike is in the offing.

2 As of now, the Bank of England has kept interest rates at It is worth noting that the Bank of England had for the first time in 10 years, in November 2017, raised the cost of borrowing from to OF JAPAN HOLDS ON TO INTEREST R ATESIn line with market expectations, the Bank of Japan (BOJ) maintained status quo on interest rates in its meeting held in January 2018 . As a result, the short-term policy rate was left unchanged at negative and the 10-year yield target around 0%. Japan s central bank expects inflation to reach 2% by fiscal 2019. BOJ expects consumer prices, excluding food prices, to go up by in fiscal 2018 and by in the 2019 UNEMPLOYMENT RATE COULD GO BELOW 4%The lowest the unemployment rate in the UK has gone in recent history was in 1973 when it hit This time around most forecasters are of the view that the unemployment rate will be around ; however, Michael Saunders, an external member of the Bank of England s Monetary Policy (MPC) thinks otherwise.

3 As per Saunders, the unemployment rate could go sub 4%. IMPROVED OUTLOOK FOR SAUDI ARABIA: IMFIn a recent move, the International Monetary Fund improved the growth projection for Saudi Arabia. The growth projection for Saudi Arabia was improved largely on the back of high oil prices but the international lending agency retained its estimates for the region. As per the IMF, the economy of Saudi Arabia contracted by last year. The international lending agency however, feels that the economy should grow by in 2018 . Further in 2019, the economy of Saudi Arabia is expected to grow by , THE MOST EDUCATED COUNTRY: OECDAs per a recent study by the Organisation for Economic Co-operation and Development (OECD), Canada is the most educated country, followed by Japan, Israel and Korea. Interestingly, countries like the United Kingdom and United States of America are 5th and 6th in the rankings.

4 Other countries in the top 10 are Australia, Finland, Norway and UPDATEINDIA UPDATEECONOMY TO GROW BETWEEN 7 IN 2018 19: ECONOMIC SURVEY 2017 18 The Economic Survey, which was tabled in the Parliament on 29 January 2018 , suggested that the economy was in the pink of health. During FY 2017 18, the real GDP growth is expected to reach and is expected to grow between 7 in 2018 19. The survey made a special note of the fact that as a result of a slew of reforms that were introduced, the economy started to accelerate in the second half of the year. Agriculture, industry and service sectors are expected to grow at the rate of , and , respectively, in 2017 18. After remaining in the negative territory for a couple of years, growth of exports rebounded and turned positive in 2016 17, and is expected to grow at a much faster rate in 2017 18.

5 The survey makes note of the point that GDP growth in India between 2014 15 to 2017 18, averaged , which is among the highest growth rates among major economies in the world. The survey however, does make a mention of the fact that increasing crude oil prices in the international market could dampen GDP growth in the coming year. As per the survey, focus areas in the medium term will be employment, education and PUSH TO AGRICULTURET aking cues from the Economic Survey, the UNION BUDGET 2018 19 had a lot to offer to the farm sector. In his BUDGET speech, Arun Jaitely, the UNION Finance Minister, stated, We consider agriculture as an enterprise and want to help farmers produce more from the same land parcel at lesser cost and simultaneously realise higher prices for their produce. To meet this objective, the UNION Finance Minister put forth many proposals like the government s decision to keep the minimum support price (MSP) for all unannounced crops of kharif season at least at one and a half times of the cost of their production cost.

6 The UNION BUDGET also spoke of setting up of an Agri-Market Infrastructure Fund for developing and upgrading agriculture marketing infrastructure. RBI MAINTAINS STATUS QUO ON POLICY R ATESIn its sixth bi-monthly Monetary Policy Statement 2017 18, the Reserve Bank of India held on to key rates. Thus, the repo rate under the liquidity adjustment facility (LAF) remains unchanged at 6%. Further, the reverse repo rate under LAF remains unchanged at and the marginal standing facility (MSF) rate and the Bank Rate at The RBI has however, raised concerns about the future growth outlook and inflation. In its statement, the banking regulator stated that the inflation outlook beyond the current year is likely to be shaped by several factors. Prominent among them are international crude oil prices, non-oil industrial raw material prices and the monsoon.

7 Against this backdrop, CPI inflation for 2018 19 is estimated to be between Further, the GVA growth for 2018 19 is projected at TAX EVADERS BEWARE; THE INCOME TAX DEPARTMENT IS HITTING HARDThe Income Tax Department has started criminal proceedings against a large number of tax evaders. Criminal proceedings have been initiated against offences like wilful attempt to evade tax or payment of any tax; wilful failure in filing returns of income; false statement in verification and failure to deposit the tax deducted/collected at source or inordinate delay in doing so. The Income Tax Department, during FY 2017, till end November had filed prosecution complaints in 2,225 cases. The number of complaints compounded by the Department during the current FY (till end of November) stands at 1, GROWTH AT MAJOR PORTS BETWEEN APRIL DECEMBER 2017 The 8 major ports in the country [Kolkata (incl.)]

8 Haldia), Paradip, Visakhapatnam, Chennai, Cochin, New Mangalore, JNPT and Kandla] recorded a growth of and together handled mn tonnes of cargo during the period April December 2017 as against mn tonnes handled during the corresponding period of the previous year. With regards the cargo handled at these 8 major ports, the highest growth was registered by Cochin Port ( ). Paradip ( ) came a close second and was followed by Kolkata ( ), New Mangalore ( ) and JNPT ( ). Kolkata Dock System (KDS) registered traffic growth of Whereas Haldia Dock Complex (HDC) registered positive growth of 17. 6 7% . ATAL PENSION YOJANA HAS OVER 80 LAKH SUBSCRIBERSS wavalamban Yojana also known as Atal Pension Yojana (APY) is the pension scheme of the Government of India for the unorganised sector. This pension scheme started on 1 June 2015 and is available to all Indian citizens between 18 40 years.

9 Under this scheme, a subscriber will receive a minimum guaranteed pension of INR 1,000 5,000 per month, depending on the contributions, after he/she reaches 60 years. On the demise of the subscriber and the spouse, the accumulated wealth will be given to the nominee. The investment pattern of the APY scheme is the same as applicable to the NPS contribution of Central Government employees. In FY 2017, it earned a return of The number of subscribers under the APY has now crossed 80 FOR RAILWAY PASSENGERSThe next time you book a railway ticket through and look into the breakup of the total fare that needs to be paid, you will realise that you have also been charged a small fee of ` This is towards the premium that you have been charged for the accident insurance that the railways offer. Below mentioned are the details of the accident insurance sum assured to be given to victim/family or legal heir of the victim are as follows: In case of death: `10 lakh, Permanent total disability: `10 lakh, Permanent partial disability up to: ` lakh, Hospitalisation expenses for injury: `2 lakh, Transportation of mortal remains: `10 thousand.

10 ECONOMIC UPDATEPMI SLIPS IN JANUARYThe Nikkei India Manufacturing Purchasing Managers Index (PMI), which grew at the fastest rate in five years in December 2017, slipped in January 2018 . From a five-year high of in December 2017, the index has slipped to Even though the PMI has contracted in January 2018 , compared to the previous month, it is still above 50. A reading above 50 denotes expansion and one below it signals UPDATECPI CONTINUES ITS NORTHWARD MARCH INFLATION Source: Ministry of Commerce & Industry, Ministry of Statistics and Programme Implementation, Government of India 012345678 Dec-17 Nov-17 Oct-17 Sep-17 Aug-17 Jul-17 Jun-17 May-17 Apr-17 Mar-17 Feb-17 Jan-17 Dec-16 WPICPIA nnual Rates (%) based on WPI & CPIThe CPI after having hit a low of in June 2017 has been on its way up since then. In November, the CPI hit a 15-month high of In December, the northward march of the CPI intensified further and it hit a 17-month high of The consumer food price index too hit a high of in December 2017 compared to in the previous month.