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My Notes 2-Feb-2018 02-02-2018
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2017-18

 

Budget

 

Facts

  1. Direct tax revenues went up.
  2. Disinvestment proceeds have crossed expectations.
  3. Dividends and GST flows are less than expected.
  4. Net Tax devolution to states recorded an increase of 3.4%

 

Fiscal deficit -

Targets set are - 3.2% for 2017-18, 3.0% for 2018-19. But it cane as 3.5% for 2017-18 and it is now pegged at 3.3% GDP for 2018-19.

for 2016-17, fiscal deficit works out at 3.7%. Only by 2020-21, medium term fiscal target of 3% can be reached.

Analysis : fiscal slippage is more due to rise in revenue expenditure. It grew by 15% compared to budget estimate of 6%.  It was majorly due to grants given by centre to the states and increased in establishment expenditure. Revenue deficit is for 2017-18 was 2.6% way above the budget estimate of 1.9%.

 

 

Projections for new fiscal 2018-19

Fiscal deficit is targeted at 3.3%

Tax revenue increase is expected at 16.6%

Total expenditure is expected to grow by 10.1%

 

Analysis of budget

  1.  Clearly, fiscal policy is not being used to stimulate growth. Government is expecting market forces to drive growth. Govt expects that impact of demonetisation and GST will tamper off. Insolvency and bankruptcy code will address twin balance sheet problem.
  2. Over heating of asset markets is a challenge.
  3. On positive side, tax to GDP ratio is increasing in india. It is expected to be 12.1% in 2018-19. It is expected to raise to 12.7% in 2020-21. It indicates widening of tax base and increasing buoyancy of tax revenues.

 

 

In addition to fiscal deficit, Government will issue bonds worth of 80,000cr recapitalisation bonds.

 

Budget has excessively dependant on extra budgetary resources.

It is a farmers budget :

 

Revenue side - new taxes / tax reliefs

Revenue receipts

  1. Corporate tax - corporate tax is reduced from 30% to 25% for companies to the size of 250 cr turnover,
  2. Stock markets : long term capital gains tax of 10% is reintroduced.
  3. Income tax : A standard deduction of 40,000rs for salaried employees in place of travel and medical reimbursements.
  4. Cess - educational cess is raised to 4%.
  5. Senior citizens :tax relief is offered on interest earned from bank deposits and post office schemes up to 50,000rs/ annum. Deduction available for health insurance premium and medical expenses has been raised from 30,000 to 50,000rs. Deduction for medical expenditure for critical illness have been hiked to 1lakh for all senior citizens.
  6. Infrastructure cess of Rs8/ltr is imposed. Excise duty on them is reduced by 8rs.

Capital receipts

Disinvestment target - 80,000cr rupees. Govt is planning to list 14 PSE on stock exchanges, privatisation of air India and two insurance companies.

Three state run general insurers will be merged to raise efficiencies.

 

Expenditure : The total expenditure is expected to increase by 10.2% over the revised estimates of previous year. Increase in capital expenditure is estimated at 9.9%. Increase in expenditure of central govt is majorly due to rise in central transfers to states for various schemes.

Revenue expenditure

Food security : budgetary support is continued for NFSA

Farmer income : MSP is extended to all crops and it is offered 50% above production cost.

Agricultural Marketing: small farmers market need to be Set up. Rural chaats will be upgraded to grain agricultural markets.

Farm credit target is set to raise by 10% to 11lakh crore in next fiscal.

Health - National health protection scheme

MSME- 3lakh crore lending under MUDRA scheme

Pensions : Government will pay 12% towards employee provident fund for new employees in all sectors for next 3 years.

Affordable housing fund under national housing bank is to be created.

 

Disinvestment

 

Branches

Ashok Nagar Branch
1-10-223/A, Sub-register office Line
Hyderabad
+91 9052 29 29 29, 9052 19 29 29

Madhapur Branch
Plot No.3, 2nd floor, Raghuma Towers
Hyderabad
+91 9052 492929

Delhi:
Old Rajendra Nagar

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