Indian Finance Minister Arun Jaitley presented his budget for 2018-2019 on Thursday in the Indiann Parliament.
He pitched this year’s Union Budget focussed on four aspects: boosting agriculture, education, healthcare benefits and infrastructure.
It also came with some generous giveaways, including free cooking gas and a health plan for the poor.
In his Budget speech, Jaitley announced that the Minimum Support Price (MSP) for notified "kharif" crops (grown during hte rainy season) would be 1.5 times of the cost incurred by farmers for production.
Here's what happened.
[All times UAE]
10.20 am
India unveiled its budget for the fiscal year starting April 1 on Thursday, in what is being seen as a test for Prime Minister Narendra Modi to maintain fiscal discipline without stifling economic growth ahead of general elections next year.
Here are the highlights of Finance Minister Arun Jaitley's budget for the 2018/19 fiscal year.
GROWTH
► Estimates 7.2 to 7.5 percent GDP growth in second half of current fiscal year
► Finance minister says "firmly on path to achieve 8 percent plus growth soon"
INFRASTRUCTURE
► To spend 14.34 trillion Indian rupees ($225.50 billion) on rural infrastructure
AGRICULTURE
► Finance minister says will focus on strengthening rural, agriculture economy
► Sets 10 trillion rupees to 11 trillion rupees credit for "agricultural activities"
► Minimum support price of all crops to be increased to at least 1.5 times of production cost
► Export of agriculture commodities to be liberalised
HEALTH/POLLUTION
► To provide 500,000 rupees per family annually for medical reimbursement under National Health Protection Scheme.
► Finance minister says the plan will protect 100 million poor families and will be world's largest health protection scheme.
► To implement special schemes for governments around Delhi to address air pollution * Removal of crop residue to be subsidized in order to tackle the problem of pollution due to burning of crop residue
9.50am
Faster growth on target: India unveiled its budget for the fiscal year starting April 1 on Thursday, in what is being seen as a test for Prime Minister Narendra Modi to maintain fiscal discipline without stifling economic growth ahead of general elections next year.
Here are the highlights of Finance Minister Arun Jaitley's budget for the 2018/19 fiscal year:
► Estimates 7.2 to 7.5 percent GDP growth in second half of current fiscal year
► Finance minister says "firmly on path to achieve 8 percent plus growth soon"
► Jaitley says will focus on strengthening rural, agriculture economy
► Minimum support price of all crops to be increased to at least 1.5 times of production cost
8.00 am
Hot on the Indian media attention are the following budget items:
► Government could widen its fiscal deficit targets for 2018-19.
► Farmers will want more fund to reach crop insurance schemes.
► Jobs, education, agriculture, climate change.
► Ecological survey flags concerns.
►Businesses expect cut in corporate tax rate to 25% from 30%.
7.56 am
Mumbai: The key Indian equity indices on Thursday opened higher ahead of the Union Budget 2018-19 presentation by Finance Minister Arun Jaitley in the Parliament.
The 30-scrip Sensitive Index (Sensex), was trading 157.21 points or 0.44 per cent higher soon after opening.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 46.25 points or 0.42 per cent higher at 11,073.95 points.
The Sensex of the BSE, which opened at 36,048.99 points, was trading at 36,122.23 points (at 9.16 a.m.), higher 157.21 points or 0.44 per cent from the previous day's close at 35,965.02 points.
The Sensex touched a high of 36,136.40 points and a low of 36,021.88 points in the trade so far.
Tough balancing act
Mumbai, New Delhi: Indian Prime Minister Narendra Modi has a tough balancing act in this week’s budget: maintaining fiscal prudence or handing out cash to placate rural voters ahead of next year’s election.
After scoring a rare sovereign upgrade late last year, Modi wants to keep global investors and credit-rating companies on his side. Key to that will be sticking his goal to narrow one of Asia’s largest budget deficits.
Bond investors have already concluded that Finance Minister Arun Jaitley will deviate from those plans when he delivers his budget on Thursday, with yields climbing 96 basis points in the past six months, the most in Asia.
In the last full budget before the elections, Jaitley needs a growth boost for an economy that’s slowing down to a four-year low, while appeasing angry young voters, who contributed to the ruling party’s worst performance in Modi’s home state in more than two decades in December.
“The fiscal math is likely to get tougher, as ongoing rural distress and a lack of investment growth may need an immediate ‘fiscal’ helping hand,” said Aayushi Chaudhary, an economist at HSBC Holdings Plc. in Mumbai.
What to watch for:
HSBC expects India to miss its fiscal deficit target of 3.2 per cent of gross domestic product for the year to March 2018, with the shortfall probably coming in at 3.4 per cent amid slower growth, the chaotic implementation of the consumption tax that hit revenues, and a lower dividend from the central bank.
ICRA Ltd, the local arm of Moody Investors Service, estimates that a 10 basis-point expansion in the fiscal deficit-to-GDP ratio allows for extra spending of Rs185 billion ($2.9 billion; Dh10.64 billion).
“Deviation from fiscal discipline may introduce further volatility into yields,” ICRA analysts Anjan Ghosh and Aditi Nayar wrote in a note. “The recent rise in bond yields represents the real cost of fiscal slippage.”
There are already hints that the deficit targets may be missed. Jaitley’s chief economic adviser, Arvind Subramanian, said on Monday that a pause in the fiscal consolidation plan can’t be ruled out and warned the government against setting overly ambitious targets.
What economists say ...
Teresa John, an economist at Nirmal Bang Equities Pvt, expects a renewed focus on agriculture and rural spending, with higher allocations to a guaranteed jobs programme and increased spending for road development in villages and irrigation projects.
“The recent state elections indicated the ruling Bharatiya Janata Party-led National Democratic Alliance government has not been able to gain much traction with rural voters,” she said. “Farmers’ distress on account of low prices of agricultural produce is likely to weigh on outcomes in the general elections.”
Increased welfare spending will mark a U-turn for Modi, who has criticised similar plans under the Congress Party-led government in the past.
“Government spending on the rural sector spirals up ahead of any election as the voter base lies in the rural and urban poor areas,” said Reshmi Khurana, head of South Asia investigations and disputes at Kroll, a risk consultancy.
