Budget 2018: Fiscal discipline has taken a backseat in the latest annual Union Budget which contains many tinges of populism, noted Indian economist Eswar Prasad said today. Prasad, a professor of trade policy at the prestigious Cornell University, said there were no major measures in Budget 2018 that could stimulate private investment.
India’s Union Budget for 2018-19 mixed prudence with populism and sought to balance economic and political imperatives, Singapore’s banking group DBS said today.
Budget 2018: Budget India was presented in Parliament. Finance Minister Arun Jaitley had made a host of announcements in budget 2018 India. The Modi government’s Union Budget has something to offer for everyone. Budget highlights show that the Modi government has come up with a maritime strategic diplomacy through Union Budget.
What made the Budget stand out is its strong focus on rural markets and the farm sector. The FM has announced measures that will boost long-term sustainable growth by improving the health of the farm and rural sector.
Budget 2018:In other words, expect a surge in inflation and a bankrupting of government since, if the crops are not procured, farmers are to be compensated for this—for most crops, post-harvest prices are always significantly lower than MSPs.
Budget 2018: The budget ignored these facts, instead choosing to justify accommodating a 0.3% of GDP breach of the FY18 deficit target and postponing the commitment made in the last budget to a 3% of GDP deficit target for FY19 on the bad-timing hypothesis.
The FM in the last full budget focused majorly on agri and rural sector, health for poor, infra. He presented India’s most ambitious National Health Protection Scheme—“MODICARE” (apparently to replicate Obamacare) under which Rs 5 lakh cover will be provided annually to 10 crore families.
Government pegs FY19 fiscal deficit target at 3.3% of GDP against 3% aimed earlier; at 3.5%, FY18 deficit exceeds target by 30 bps.
Budget 2018: Dhanraj Bhagat, partner, Grant Thornton India, said, “Disposable income in rural India will increase, resulting in more discretionary spending and consumption, benefitting the FMCG sector.”
Budget 2018: The Union Budget for the financial year 2018-19, being the last Budget of the current Bharatiya Janata Party-led government before the 2019 general elections, meant that the finance minister Arun Jaitley had the huge task of considering populist expectations.
Budget 2018: Union Budget 2019 extends the fiscal consolidation glide path with an eye on elections. FM has expanded the fiscal deficit target for FY18 and FY19 to 3.5% and 3.3% of GDP. Focus for FY19 expenditure is primarily towards strengthening agriculture, rural development, health, education, employment, MSME and infrastructure sectors.
Budget 2018: Creation of jobs in rural areas, and increasing farmer incomes is the next major requirement. Farmers will also be enabled to sell their produce directly to customers, and incentives are being given to adopt a cluster approach to horticulture production.
We believe that the Budget 2018 supports our standing call of playing consumption over investment.
Budget 2018: Finance minister Arun Jaitley tried to redress the farmers’ woes by announcing that the minimum support price (MSP) will be now 50% above the cost of production. And, he also said that for Rabi crops, they have already done it, and it will be followed for Kharif crops.
Budget 2018:The targets for construction of houses under the Pradhan Mantri Awas Yojana (PMAY) for 2018-19 were also outlined. Under the PMAY (Gramin), 49 lakh houses will be constructed and the outlay for the programme stands at Rs 33,000 crore.
Cut in food subsidy bill for decentralised states suggests even the govt doesn’t expect much impact of MSP hike.
Budget 2018: Every single commentator at the pre-Budget meets had declared it would be a rural-focused Budget by the government. The government didn’t disappoint, though the pleasant surprise was its focus on health.
Budget 2018: Budget 2018 is expected to be the last full budget of the current government, and there were some expectations (or worries) that the government might choose fiscal profligacy for political gains over fiscal prudence.
Budget 2018: In the Union Budget, the adverse impacts of two major policy shocks clearly show up in the fiscal numbers. The government not only deviated sharply from achieving the 3.2% fiscal deficit in 2017-18, which is revised upwards to 3.5% (and final number could be little higher), it also projects fiscal deficit to be at 3.3% in 2018-19.
Budget 2018: Jaitley chose to limit a much-anticipated corporate tax cut to smaller companies — the tax rate on income of companies with a turnover up to Rs 250 crore will be 25% while larger firms will still shell out 30% of their profits as tax.
Budget 2018: When a pro-business dispensation starts taking some steps, we worry. Remember that in 1966 Indira was also right-of-centre and pro-business.
… but with just Rs 2,000 cr for the new health spend buffer, this is nowhere close to what is needed to improve healthcare access.
Budget 2018: The biggest positives in this year’s Budget were the increased pricing of the farm produce and the health insurance to ten crore families with an insurance cover of Rs 5 lakh.
Budget 2018: After a hiatus, the Budget 2018 brought back a 10% tax (without indexation) on long-term capital gains (LTCG) arising from sale of listed equity if the amount is above Rs 1 lakh.
Budget 2018: The government will make the contribution to the EPFO for first three years and has allocated an amount of Rs 1,652 crore, which is more than three times the actual spend under the job-incentivising Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) in 2017-18.
Budget 2018: INDIA’S INFRASTRUCTURE BUDGET for 2018-19, placed at close to Rs 6 lakh crore, will be funded both from budgetary and non-budgetary sources with the National Highways Authority of India (NHAI), expected to tap the markets via an infrastructure investment Trust (InvIT).
The Union Budget 2018-19 has predominantly focused on revitalising the rural economy with the thrust on the healthcare, agriculture and infrastructure sectors. But there are a couple of disappointments in the Budget which will dampen the investment scenario in the country.