UNION BUDGET 2018-19

23rd BATCH
MBA DEPARTMENT
INTRODUCTION

ABHISHEK R PILLAI
 HIGHLIGHTS OF INDIAN ECONOMY
2018-19 Growth Rate at 7 - 7.5%

Industry growth Rate

4.4%
Farm sector growth
2017-18 Rate 2.1%

FDI in service sector

rises 15%
HIGHLIGHTS OF UNION BUDGET

No changes in personal income

tax slabs.

National Health Protection

Scheme for 10 cr poor families.
Free power connections to 4 cr
homes

Eight crore free gas

connections for poor women

Disinvestment target ₹80,000 cr

Railway capex ₹1.48 lakh cr

LTCG Tax of 10% for over 1

lakh investment.

MSME sector gets Rs 3794 cr.

Rupee Comes From
Rupee Goes to
UNION BUDGET 2018-2019
INDIAN ECONOMY AT A
GLANCE

BY,
ARJUN KR
DENNIS JOSE
INDIAN ECONOMY AT A GLANCE
 Economic
Indicators
GDP
FDI

INFLATION FISCAL
FOREX
DEFICIT
 GDP

6.3%

Q1 (2017-2018) Q3 (2017-2018) Expected forecast for FY

2018-2019
• Q3 growth rate in previous year was 7.9 %.
 INFLATION
• The average inflation of India in FY2017-2018
is seen at 3.7 % (CPI)

• Persistently high oil price remain key risk to

affect inflation.

• Consumer prices in India increased 5.21 %

year-on-year in December of 2017, It is the
highest inflation rate since July of 2016
AVG CPI 2017 3.7 %
 FISCAL DEFICIT

3.3%

FY 2017 -2018 Last year budget target FY 2018-2019

estimated estimated
FOREIGN EXCHANGE RESERVES

• Foreign Exchange Reserves in India reached an

all time high of 417.79 billion dollars in January
2018.

• Foreign exchange reserve during January 2017

was 360 billion dollars.

• Foreign Exchange Reserves in India averaged

210 billion dollars in 1998 until 2018.
FOREIGN DIRECT INVESTMENT
• Foreign Direct Investment in India increased
by 1.571 billion dollars in October of 2017
• Foreign Direct Investment in India averaged
1.280 billion dollars from 1995 until 2017
• FDI reached it’s all time high of 8.57 billion
dollars in August of 2017.
• A Major boost to the FDI comes from the
 INDIAN ECONOMY FORECAST

• GDP in India is expected to be 2500.00 USD

Billion by the end of this quarter.

• Indian GDP is projected to trend around 3100.00

USD Billion by 2020.
 IMPACT ON
CAPITAL MARKETS

Nandhu Nirmal Sha

Aravind S
 Long Term Capital Gains Tax
(LTCG)
Long Term Capital Gains or LTCG mean
gains arising from the transfer of a long-term
capital asset.

Long Term Capital Asset is any asset held

for a period more than one year.
 LTCG Tax

The Finance Bill, 2018 proposes to provide for a

new LTCG tax regime for the following assets:
– Equity Shares in a company listed on a recognized
stock exchange
– Unit of an equity-oriented fund
– Unit of a business trust

Capital gains above Rs.1 lakh to be taxed at 10%

 LTCG Tax

Capital gains up to 31st Jan 2018 are exempted

from the tax , which is in turn a relief to existing
investors.

The amount of gains made thereafter this cut-off

date will be taxed.
 Impact of LTCG Tax

Foreign Institutional Investors and

Foreign Direct Investors would find India
less attractive, as returns would be less.

Expected revenue from LTCG Tax-

Rs.20000 cr.
 Merger of Government Insurance Companies

Oriental Insurance, National Insurance, and

United India Insurance to be merged into a single
entity, and subsequently launch IPO.
New 7.75% Government Savings Bonds

7.75% Government Of India Savings Bonds,

introduced, replacing the 8% scheme.

If interest exceeds Rs.10,000, TDS is

applicable at existing rate.
 Privatization & Disinvestment
• Strategic privatization of national aircraft
carrier Air India, along with 14 Central Public
Sector Enterprises.
• The government has also initiated strategic
disinvestment in 24 CPSEs.
• Aims to raise Rs.80000 cr. through
disinvestment.
 India- Disinvestment Data
100,000.00
90,000.00
80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
2011- 2012- 2013- 2014- 2015- 2016- 2017-
12 13 14 15 16 17 18
TARGET (IN RS. CRORE) 40,000.030,000.040,000.043,425.041,000.0 56,500 72,500.0
ACHIEVEMENT (IN RS.
13,894 23,957 15,819 24,349 23,997 46,246.592,475.7
CRORE)
 Sensex in Budget Week

02-Feb-18 35066.75

01-Feb-18 35906.66

31-Jan-18 35965.02
Close
30-Jan-18 36033.73

29-Jan-18 36283.25

34000 34500 35000 35500 36000 36500

 Nifty 50 Change(%)
4
3.5 3.4

1.8 1.9
2

0.9
1
0.5 0.4
0.2
0
1.8 -5.2 0.9 1.9 3.5 -1.1 0.5 -1.4 0.4 3.4 0.2 -2.3
-1 1-Mar-07 3-Mar-08 7-Jul-09 2-Mar-10 1-Mar-11 19-Mar-12 1-Mar-13 11-Jul-14 3-Mar-15 1-Mar-16 2-Feb-17 2-Feb-18
-1.1
-1.4
-2

-2.3
-3

-4

-5
-5.2
-6

Nifty 50 Change(%)
 Nifty in Budget Week

02-Feb-18 -2.33% 10,760.60

01-Feb-18 -0.10% 11,016.90

31-Jan-18 -0.20% 11,027.70

Close

30-Jan-18 -0.73% 11,049.65

29-Jan-18 11,130.40

10,500.0010,600.0010,700.0010,800.0010,900.0011,000.0011,100.0011,200.00
 THERESA ANTONY
JANET MARY ABRAHAM
 Revenue Sources
Tax Revenue Non Tax Revenue

18 20 16 14
21

82 80 84 86
79

2014-15 2015-16 2016-17 2017-18 2018-19

Direct Taxpayers in India
Taxpayers
3%

Taxpayers
Others

97%
 HIGHLIGHTS
• No change in personal income tax slab rates.
• Senior citizens get Rs.50,000 exemption for
medical insurance premium.
• Senior citizens get Rs.10,000 exemption in
income from FD’s.
• Health and education cess increased from 3%
to 4%.
• 10% tax on LTCG exceeding 1lakh.
• Customs duty on mobile phones rise to
20%from 15%.
• Customs duty for certain TV parts rose to 15%
from 10%.
 Income Tax Slab 2018-19

Income slab Individuals Senior Very senior citizens

citizens (age above 80)
(Age 60-80)
Up to 250000 nil nil nil

250001-300000 5% nil nil

300001-500000 5% 5% Nil

500001-1000000 20% 20% 20%

Above 1000000 30% 30% 30%

• Standard deduction of Rs. 40,000 for medical
expenses for salaried class.

Transport allowance Rs. 19200 Mediclaim benefits Rs. 15000

 Comparison Chart of Effective Tax
Rate due to Additional Cess
Taxable Individual Senior Citizens Very Citizens
(INR) < 60 years (60-80 years ) (Above 80 years)

Pre Post Pre Post Pre Post

Budget Budget Budget Budget Budget Budget
0 to 250,0000 NIL NIL NIL NIL NIL NIL
250,001 to 300,000 5.15% 5.20% NIL NIL NIL NIL
300,001 to 500,000 5.15% 5.20% 5.15% 5.20% NIL NIL
500,001 to 20.60% 20.80% 20.60% 20.80% 20.60% 20.80%
1,000,000
1,000,001 to 30.90% 31.20% 30.90% 31.20% 30.90% 31.20%
5,000,000
5,000,001 to 33.99% 34.32% 33.99% 34.32% 33.99% 34.32%
10,000,000
Above 10,000,001 35.535% 35.88% 35.535% 35.88% 35.535% 35.88%

*source- Union Budget analysis by PWC

*source: press information bureau
 Other Revenue Sources
Corporation Tax Customs Union Excise Duties Service Tax

621000 112500 259600 79507

0
2766995
135242 275000

563745
245000

538745
254499
225370
484924 406900
382094

2016-2017 2017-2018 2017-2018 2018-2019

*source- union budget 2018-19

 CORPORATE TAX
Sl. Type of company Tax
No. Rate
1. Companies whose total turnover is up to 250 25%
crore

2. Companies whose total turnover is above 250 30%

crore
3. Foreign companies 40%
 GST
CGST IGST GST Compensation rate

603900

221400
161900

61331 50000
9000

2017-18 Revised estimates 2018-19 Budget estimates

*source- union budget 2018-19

 Sector Analysis
(Budget 2018-2019)

Presented by,
Anat Anna Thomas
Anitt Jose
Sector Analysis

Sector
Education Sector
Health Care Sector
Infrastructure Sector
Real Estate Sector
Telecom & Digital
 Education Sector
• From the union budget 2017-2018 the
education sector was increased by 9.9 %.
• Amount allocated for education Rs 85,010
crore.
• To launch a major initiative named
“Revitalising infrastructure and system in
education by 2022.with a total investment of
1,00,000 crore in next 4 years.
 Social Security
• Allocation of National social assistance
program is 9975 crore.

• Social security and protection program to

reach every household of old, widows,
orphaned children.
 Health Care Sector
• Launch a Flagship National Health Protection
Scheme.
• Cover over 10 crore poor and vulnerable
families providing coverage up to 5 lakh rupees
per family per year for hospitalization.
• Government allocate additional Rs 600 crore to
provide nutritional support to all TB patients at
the rate of Rs 500 per month.
 Health Care Sector
• Pradhan Mantri Jeevan Jyoti Beema Yojana has
benefitted 5.22 crore families with a life insurance
cover of Rs 2 lakh on payment of a premium of
only Rs 330 per annum.

• Pradhan Mantri Suraksha Bima Yojana, 13 crore

25 lakh persons have been insured with personal
accident cover of Rs 2 lakh on payment of a
premium of only Rs 12 per annum.
 Impact on Health Care
• Long term capital gains tax not available for
ULIPs: positive for life insurance companies.
• Implement of national health policy : positive
for general insurance company.
 Infrastructure and Real
Estate
• Increase in infrastructure allocation from 4.94
lakh crores (FY 2017-18)to 5.97 lakh crore(FY
2018-19) against estimated expenditure.
 Infrastructure & Real Estate
2017-2018 2018-2019
4.94 5.97

INFRASTRUCTURE ALLOCATION
7

0
2017-2018 2018-2019
 Infrastructure & Real Estate
• Under the Bharatmala Pariyojana, about
35000kms road construction at an estimated
cost of Rs 5,35,000 crore has been approved.
• Using online monitoring system of PRAGATI
alone, project worth 9.46 lakh crore have been
facilitated.
 Impact on Infrastructure

• Roads sector outlay up 10% to INR 1.33 tn.

positive for both developers and construction
companies.
 Impact on Real Estate

• Value of Stamp duty increased up to

5%(negative).
• Investment bond holding period increased from
3 to 5 years. It affects large investment in real
estate.
 Telecom & Digital
• Overall allocation of Rs 14,500 crore for the
budget 2018-2019.
• Allocation of 10,000 crore for expansion of
telecom industry.
 Telecom & Digital
• The budget doubled the allocation on Digital
India Programme to Rs 3073 crore in 2018-
2019.
• The finance minister allocated Rs 10,000crore
in 2018 -2019 for creation and argumentation
of telecom infrastructure.
Impact on Telecom & Digital

• The Govt’s proposal to invest in Digital India

to make telecom services, including data,
available in every part of the country(positive).
 Conclusion
SECTORS IMPACT
Education sector Positive
Health Care Sectors Positive
Infrastructure Sector Positive
Real Estate Positive/Negative
Telecom & Digital Positive
Sectors
 IMPACT
ON
KERALA ECONOMY

Presented By
Abin Varghese
 Wish List
 An allocation of at least Rs.500 cr for price stabilization to

save rubber and coconut farmers.

 All India Institute of Medical Sciences (AIIMS)

 Raising of import duty of rubber

 A package for revival of the FACT

 More funds for Angamaly-Erumeli Sabari Rail

 A package for the development of Kochi Metro

MAJOR ALLOCATIONS
 MARINE PRODUCTS EXPORT DEVELOPMENT
AUTHORITY

2014-15 2015-16 2016-17 2017-18 2018-19 Change % change

120 120 102 105 105 nil nil

Allocation for MPEDA

125

120

115

110

105

100

95
2014-2015 2015-2016 2016-17 2017-18 2018-19
 RUBBER BOARD

2014-15 2015-16 2016-17 2017-18 2018-19 Change % Change

173 161.75 132.7 142.6 146.62 4.02 2.8
Allocation for Rubber Board
200

180

160

140

120

100

80

60

40

20

0
2014-2015 2015-2016 2016-17 2017-18 2018-19
 SPICES BOARD

2016-17 2017-18 2018-19 change % change

197.1 182.1 180 -2.1 1.15
Allocation for Spices Board
200

195

190

185

180

175

170
2016-17 2017-18 2018-19
 Cashew Export Promotion Council

Year 2016-17 2017-18 2018-19 Change % of Change

Allocation 16 16 14 -2 12.5
Allocation for CEPC
200

195

190

185

180

175

170
2016-17 2017-18 2018-19
• Health Insurance Scheme
• Tax reduction for companies with turnover of up
to Rs 250 crore
• Reduction of import duty on raw cashew
• Decision to increase institutional credit to
farmers
 Major Disappointments

• A package for revival of the FACT was

ignored.
• AIIMS has been ignored.
 AGRICULTURE
ANALYSIS
(BUDGET 2018-2019)

Presented By,
Aksa Anna Mathai
Why Agriculture?

7.68 % of total
global output to
GDP

Employees
39.1% of
workforce
MAIN AIM

Double farmers’ income by 2022, when India

celebrates its 75th year of Independence
 Minimum Support Price
(MSP)
• MSP for the majority of rabi
crops at least at one and a half
times the cost involved.

• To keep MSP for the all

unannounced crops of kharif at
least at one and half times of
their production cost.
Agri-Market Infrastructure
Fund
Agri Market
Infrastructure
Fund
For
developing and
upgrading
22000 Grameen
Agricultural 2000
Markets
(GrAMs) and
crore
585 APMCs.
Prime Minister Krishi
Sampada Yojana
Allocation of
Ministry of
Food Processing

For boosting
investment in Doubled
food from 715
processing. crore to 1400
crore
 Institutional Credit For
Agriculture Sector
2014-2015 2017-2018 2018-2019

8.5 LAKH CRORE 10 LAKH CRORE 11 LAKH CRORE

YEARLY ALLOCATION

12
10
8
6
4
2
0
2014-2015 2017-2018 2018-2019
 Ujjwala Scheme
Scheme of the Ministry of Petroleum & Natural Gas for
providing free LPG connections to women from Below
Poverty Line (BPL) households.

• Propose to increase the target of providing free connection

from 5 crore to 8 crore poor women.
 Prime Minister Saubhagya
Yojana

• Providing electricity to all households of the

country.
• 4 crores poor households are being provided with
electricity connection free of charge. Government is
spending 16000 crore under this scheme.
 To Conclude
The MSP proposal is to ensure that the farm
produce, reach the ultimate consumers from the
farms, with maximum returns to farmers.
BUDGET ANALYSIS
2018-’19

CONCLUSION
This budget shows that the government has slipped
on its fiscal goal.
The government now aims to reduce its debt-to-
GDP ratio to 48.8% in 2018-19, 46.7% in 2019-20
and 44.6% in 2020-21.
While fiscal deficit as a percentage of GDP is
targeted to be reduced to 3.3%, 3.1% and 3%,
respectively during the same period.
Another worrying aspect on the fiscal side is that
capital expenditure was 11.7% short of the budget
target for fiscal 2018 and 3.9% lower than the
previous fiscal.
The government cannot afford to slip on its
divestment and non-tax revenue targets.
 Needs to keep a close watch on expenditure to
achieve the fiscal deficit target of 3.3%.
Stepping up minimum support price (MSP) to 1.5
times the cost of production and mechanisms.
Supporting development of farmer producer
organizations to reduce the hold of middlemen.
Commitment to a flexible trade policy tuned to the
needs of the farmer will also help in raising farm
incomes.
The focus on rural housing and roads will help
build assets and create jobs.
Construction is a very labour-intensive activity
and, more importantly, it can absorb low-skilled
workers a key characteristic of rural India.
The world’s largest government-funded health
care programme.
Growth has already bottomed out, so the key driving
factors for revival in fiscal 2019 will be:
 To remove the fading effect of demonetization and
GST implementation.
 Enhanced ability of banks to lend following
recapitalization and
 Normal monsoons.