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INDIAN (B)

India Inc Calls It As 'Overall Good' Budget

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Finance minister Arun Jaitely’s Union Budget 2018 is appeared to be more populistic as the government looks more focussed on the general election next year. Though the recommendations are mostly repeat of the previous year’s, the government has tried to make it appealing to the rural and farming sector. The emphasis to healthcare programmes is being considered a s positive step. The industry and corporate leaders, including sectoral consultants, have reacted to it saying an overall good Budget.  

Tata Steel managing director and CEO T V Narendran called the Budget as a balanced and positive one.

“The finance minister has presented a budget which is both balanced and positive. Focus on rural infrastructure, agricultural output and farmer income will help reduce the agrarian distress and boost the rural economy,” he said.

While emphasis on health, education and employment generation would promote inclusive growth, higher spending on infrastructure with a focus on airport capacity expansion and transportation especially de-bottlenecking of the railways will definitely boost steel demand as will the focus on affordable housing, he said.

“We also believe that the spending on infrastructure will further help reduce the cost of doing business as it will drive greater efficiencies in logistics,” Tata Steel chief said.

Satish Reddy, chairman, Dr Reddy’s Laboratories, said that the government’s focus on rural development and agriculture is a welcome step. The long overdue emphasis on our rural economy and agriculture will stimulate demand. “The announcement of the Aayushman Bharat program for healthcare is a game changer and the coverage of ten crore people under the National health protection scheme is commendable. This will give an impetus to healthcare benefits for people in the most deserving sections of society,” he added.
         
Akhil Bansal, Deputy CEO, KPMG India, said that 2018 Budget strives to uplift economic growth by modernizing agriculture, revamping education system and providing better health coverage.

“It aims to achieve all this with a minimal deviation in the fiscal deficit target. The proposal to provide health protection up to Rs 5 lakh is one of the notable features of this budget, which could pave way for the creation of a healthy India. While the increase in allocation for infrastructure will have a large multiplier effect on the economy as well as private investment, the reduction in the corporate tax rate for firms with a turnover of up to Rs 250 crore will go a long way in making them more competitive,” he said.

Bansal added that emphasis on fostering horticulture clusters, organic farming, and agriculture exports is commendable. Micro-entrepreneurs will benefit from the 23 per cent growth in MUDRA target. “The dedicated fund for affordable housing will provide a real thrust to the construction sector, which is one of the largest employers in the country. In short, there is a clear attempt to nurture all facets of a new, transformative India without compromising on fiscal prudence,” he added.

India head of International Air Transport Association, Amitabh Khosla said;  “We welcome the focus on airport infrastructure capacity announced in the Budget. In our 20 year passenger forecasts, IATA anticipates India will become the 3rd largest aviation market by 2024. But this is by no means guaranteed. To make this a reality, airport capacity in India needs to be augmented and expanded quickly. IATA has earlier recommended and is supportive of leveraging AAI’s balance sheet for infrastructure creation and expansion.

But the big question mark on capacity, and a critical area of concern for IATA , continues to be about Mumbai airport. Navi Mumbai airport is still a distant dream. In the meantime, Mumbai continues to fall behind in aviation activity, and Maharashtra state is unable to maximize the economic potential that can be delivered by aviation. We urge the government to urgently look at innovative approaches to bridge the infrastructure shortfall.”

Vijay Thadani, Vice Chairman and MD, NIIT Ltd commented that it is a progressive budget with the right emphasis on training of teachers, use of technology and funding for research.

Among the positive steps for the education sector, revitalising Infrastructure and Systems in Education (RISE) by 2022 with a total investment of Rs 1,00,000 crore in next four years stood out. The fact that the Higher Education Financing Agency (HEFA) would be suitably structured for funding this initiative is a much appreciated provision, he said.

While, increase in digital intensity in education and envisaging move from ‘‘black board’’ to ‘‘digital board’’; using technology to upgrade the skills of teachers through a digital portal “Diksha”; national program on artificial intelligence under the aegis of Niti Aayog; mission on Cyber Physical Systems and a test bed for 5G technology at IIT Chennai were also encouraging initiatives, he said.

Glenmark chairman and managing director Glenn Saldanha viewed the Budget as moderate.

“While the finance minister has presented a moderate budget, he continues to lay emphasis on overall infrastructure development and strengthening of the rural economy. The increased focus on healthcare augurs well for citizens of the country.  On the corporate side there are no significant changes or announcements, which was expected,” Saldanha said.

Khushru Jijina, Managing Director, Piramal Finance & Piramal Housing Finance, said that the Budget was pragmatic one and focused on fortifying the economy as a whole. The government’s endeavor to provide housing to every poor citizen by 2020 through the establishment of a dedicated affordable housing fund in the national housing bank, along with priority sector status being granted, is a commendable one. The government assuming ownership of NHB from RBI is also positive as it would translate into the focus of NHB shifting from regulation to development.

The reduction of the GST rate from 12 per cent to 8 per  cent on affordable and low-cost housing units last week was a welcome reform.  Building 31 lakh homes in 2018-19  in urban areas and a further 51 lakh in rural areas will go a long way in addressing primary housing demand.

Overall, the strong economic impetus provided in the budget will ultimately boost housing and real estate. The introduction of long term capital gains tax at 10 per cent on equities will also have an indirect impact on making investment in real estate (over listed stocks) more attractive than before. Tax breaks being granted to senior citizens and salaried employees will increase their disposable income available for making capital purchases. A push on infrastructure comprising public investment in the rural areas, agricultural marketing, urban connectivity, particularly Metros etc will also multiply investment prospects for real estate sector, Khusru added.

Deliotte India managing partner (tax) Vipul Jhaveri said that the government’s agenda of ‘Transform, Reform and Perform’ in the budget focuses on implementation of the recent reforms.  Hence there are no big bang announcements.  The budget addresses needs of agricultural sector and MSMEs, through which agenda of inclusive growth, formalization of economy and boost employment generation is targeted to be realized. The FM’s promise of reducing corporate tax rate from 30 percent to 25 percent for companies remains limited to the MSMES leaving the large tax payers to wait for another year. However, 99% of MSME’s with turnover of upto Rs 250 crores would benefit from the rate reduction. Unfortunately, the large corporates will now carry a slightly higher tax burden from an increase cess of 1 percent.  Rationalization of Long term capital gain taxation may be inopportune in terms of timing as their ability to raise funds through IPOs and FPOs may be impacted due to market sentiments changing.  

“There are two announcements which will impact the healthcare delivery industry. The  Suraksha Bima Yojana enhanced limit of 5 lakh rupees per family is yet to be launched, so the details and capital allocation will only be known when it is launched,” said Zahabiya Khorakiwala, MD, Wockhardt Hospitals group.

However, the intent is quite positive, as almost 40 per cent of underprivileged population would be able to access the secondary and tertiary care healthcare, and this would increase the market size for healthcare providers radically. The second scheme is for 1.5 lakh healthcare centres, where the budgetary provisions are only 1200 crore.

The investment in hospitals is a subject matter of viability, so it is yet a bit premature to assess the investment potential of the schemes announced. However, if the prepositions are commercially viable, these would be opening a vast market for the investments to flow in,” she added.                        

Quote by Bhavin Patel, founder and CEO, LenDenClub, viewed it as an encouraging Budget as far as digital technologies are concerned.

“Government is highly focused on the growth of Digital economy, thus encouraging acceptance and growth of digital platforms like P2P lending platforms. Additionally, the internet penetration in rural India will enable us to create an understanding of lending/ borrowing amongst the rural population, while promoting the digital drive in the rural India,” he said.

Government’s receptiveness towards encouraging the use of new technologies like Blockchain in the payments sector will further revolutionize the finance segment altogether. The efforts towards creating the right environment for Fintech companies to grow in India will bring in promising growth prospects for P2P lending platforms, he added.

Dhirendra Singh, Chairman, Manpasand Beverages, said that  with the union budget 2018, the government has shown a commitment towards reviving rural economy.

“Measures such as increasing farmers’ income and doubling investments in food processing sector will have a positive impact on industries that are connected to agriculture and allied sectors. The budget proposes to adopt a cluster approach for agriculture and it is a welcome move which will lead to better connectivity of produce and markets. By promoting agro-processing and agri-logistics, the Govt. has provided a fertile ground for streamlining and formalising the supply-chain sector. This will lead to direct linkages between farmers and food processing sector. A 100% tax reduction for the likes of farmer producer companies is a welcome move as it will bring in more players in the business of post harvest value addition,” Singh added.

Arvind Mediratta, MD and CEO, Metro Wholesale, India, called the Budget as socially inclusive.

“Overall, the budget is a socially inclusive one that has laid major emphasis on agriculture, social infrastructure, healthcare, social protection and digital transformation.

The government has taken some measures in this budget towards strengthening the SME and MSME sectors. The Corporate tax rate reduced to 25 per cent  for companies with turnover up to Rs 250 crore in the financial year 2016-17, will also majorly boost the micro and small and medium business eco-system. This will augment the ease of starting own businesses while helping existing business also.

In the backdrop of agrarian stress, the budget announced by the government has shown its resolve in continuing to provide resources to rural India. With 2000 crore corpus for Agri-Market Development, support to organic farming, allocation of 10,000 crore to fisheries and animal husbandries related infrastructure; these measures will help in augmenting farmer’s income, improve the quality of farm produce, and employment for the farming community, Mediratta said.

IFFCO managing director U S Awasthi welcomed the Budget saying it is  path breaking.  “It has given the much needed impetus to the Agriculture sector, the backbone of Indian economy,” he said.

Allocations such as Rs 500 crore for Operation Green, corpus of 10,000 crore for Fishery and Aquaculture Infrastructure Development Fund and Animal Husbandry Infrastructure Fund, Rs 11 lakh crore for institutional credit for farm sector among others would definitely help farmers of the nation to get the necessary funding. Policies such as implementation of MSP for all crops; being hiked to 1.5 times of production costs, linkages of APMCs with ENAM and aim to develop 22,000 Gramin agricultural markets and liberalisation of agricultural products export will boost up help farmers morale with more incomes at their hands and help in the growth of agrarian economy. Making Direct Benefit Transfer a reality would also provide the farmers the much required flexibility in terms of money, choice and decisions.

Technology has always been an enabler. One lakh gram panchayats have already been connected through broadband. Focus on linking more villages through broadband and creating hundreds of wifi spots to make internet available to households in rural areas too augur well for fast tracking of the development process. Programmes such as Ujjawala Yogna, Saubhagya Yojana, will help in the overall living standards of these people. Further, 100% tax deduction for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above would help attract more companies to enter into farm producing, he said.

Vishal Beri, Hinduja Healthcare Surgical, said; “The promise on health spending with the Government’s 2018 budget announcement has displayed a continuity of thought. The flagship National Health Protection scheme seems to be one of the largest benefit programmes, and a milestone towards achieving greater affordability and accessibility, when it comes to healthcare.

The newly announced “Health Protection Scheme” seems like a bold move and a big step towards Universal Health Coverage.  However, as with previous schemes, the key remains successful execution and minimization of leakages.

The Government’s idea to set up 24 new medical colleges and hospitals, by upgrading district level ones, will help address the shortage of skilled medical professionals, albeit only over the medium term. Overall, it is a pursuit which will bring healthcare closer to every household,” Beri said.




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Budget to sting buyers of Apple's iPhones, Audi cars, other luxury brands

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MUMBAI (Reuters) – India outlined a farmer-friendly budget on Thursday, but for its burgeoning middle class, who aspire to own luxury goods ranging from Ray-Bans to iPhones, and Zippos to Fitbits – imported goods are set to get a whole lot costlier.

The budget outlined by India’s Finance Minister Arun Jaitley doubled existing customs duties on imported lighters, perfumes, make-up, wrist watches, sunglasses, toys and gaming consoles. It has also significantly raised duties on imported footwear, imitation jewellery, along with mobile phones, television screens, vehicles and components used in them.

In the short-term at least, the move could potentially affect Indian demand for products from Apple, Fitbit, Zippo, Mattel and beauty products maker Coty, which sells luxury fragrances and cosmetics from brands including Burberry, Calvin Klein and Gucci.

Jaitley, announcing the changes, said these sectors had enough room for local value addition and the decision would boost job growth in India.

The budget proposals will also shore up Prime Minister Narendra Modi’s flagship ‘Make in India’ initiative.

When Modi came to power in 2014, he promised to turn India into a manufacturing powerhouse like neighbouring China and to create jobs for millions of Indians joining the workforce every month. But his ‘Make in India’ and ‘Digital India’ programmes are still a long way away from delivering on lofty job expectations.

For the auto industry, which is already battling a hike in tax rates on luxury cars and sports utility vehicles as part of the new nationwide goods and services tax, the import duty hikes will have a further negative impact.

Rahil Ansari, head of Audi India dubbed the Indian budget “disappointing” and said luxury carmakers had been counting on more support from the government. Ansari said the customs duty hikes would impact the company’s ability to plan its short and long-term strategy.

“The biggest impact of the increases would be on premium auto manufacturers especially for buses and trucks,” said Sandeep Chilana, partner of law firm Shardul Amrchand Mangaldas.

COSTLIER SMARTPHONES

The tax rate hike is also set to push up prices of premium smartphones such Apple’s iPhones.

“Prices of Apple’s devices could rise and will likely push them to expand assembly in India but Apple’s brand value gives them the bandwidth to push higher prices to customers,” said Neil Shah of tech research firm Counterpoint.

Shah said the move would also hurt cheap Indian smartphone makers like Micromax, which have cut down on local manufacturing and rely more on import of low-cost phones from China.

The new tax rates were, however, welcomed by some smartphone makers and local tyre manufacturers like Apollo and JK Tyre.

Onkar Kanwar, chairman of Apollo, said the move would boost its commercial vehicle tyre sales.

Lenovo, which doubled its local production capacity to up to 12 million units annually in the fiscal year to March 2018, will continue to scale up India manufacturing depending on the market and consumer demand, Sudhin Mathur, head of Motorola Mobility India told Reuters.

Reporting by Sankalp Phartiyal and Aditi Shah; Editing by Euan Rocha and Jane Merriman



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INDIAN (B)

Bale Of Green Promises, Union Budget 2018

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MS Swaminathan says that whole budget touches upon some hotspots. There are things promised that may not be easy to deliver. BW Businessworld investigates the agrarian highlights in quantitative terms.

An overall/holistic perspective for the agriculture has been a key point for this budget. There were few facts and figures which government had promised and to deliver. Pradhan Mantri Fasal Bima Yojana (PMFBY) with a provision of  Rs 13014.15 crore, has been proposed to complete the insurance coverage of 50 per cent of the gross cropped area in country.

A factor for marginal farmers is a subsidy to short-term credit (STC). Interest subsidy for STC to farmers has a financial outlay of Rs 15000 crore. These Crop loans of up to Rs 3 lakh per annum has been promised to reach out to about 8.5 crore farmers at seven per cent annual interest, and at four per cent on timely repayment of crop loans had been another focus area.

Various market intervention schemes had been enabled as a measure of relief for farmers. MIS and Price Support Scheme worth Rs 200 crore had been the outlay had somehow achieved a need-based intervention in distress conditions. Green revolution is the new brainchild of this government a massive fund of Rs 13959.33 crore had been an outlay for it. Rashtriya Krishi Vikas Yojana (RKVY) with Rs 3600 crore outlay had been assured where states are given complete flexibility to choose projects as per needs, priorities and resources.  

The other important aspect is Krishi unnati scheme (scheme for agriculture growth) had been envisioned, this will cover ‘Mission for Integrated Development of Horticulture (MIDH); CIH, Nagaland, NHB & CDB’ a total of Rs 2546.30 crore had been the outlay for which an area coverage of 1,55,085 hectare land will be covered. A cold chain/ cold room/ chambers by NHB 55 new projects had also been promised to deliver. The new plantation of 4500 hectare area is also promised. A number of 1,76,488 training persons to be deputed for the same.

Various integrated schemes for data collection had also been a focus area of for this budget. Integrated Scheme on Agriculture Census & Statistics (ISACS) will be carrying a relatively low fund of Rs 250.49 crore and Rs 130 crore respectively. It has been promised to cover a vivid 25 crops, if done it may still play a moderate role. Finance minister had already covered in his budget address that a better cooperation for demand and production forecasting will be focus area.

Entire agriculture market infrastructure and national agriculture market with massive 30 lakh tons capacity rural godowns and 400 other storage infrastructure projects had been promised. Also the Integration of 200 wholesale markets with e-market platform had been projected. It will be done with a moderate budget provision of Rs 1104.50 crore, National Food Security Mission (NFSM) with Rs 1,500 crore budget had also been fixed. This will be covering a total of 4.40 million tons food grains (including rice, wheat pulses and coarse cereals).

Plant protection quarantine (PPQ) had been given a relatively less importance which is not a new chapter for this critical area. The submission for PPQ had been given a sum of 300 crore Rs which is relatively less keeping in mind that India had been on a record production track from few years. Though sub-mission for mechanisation had got Rs 1200 crore which is way better as it includes part of training some 15000 farmers. Executive Director of Sonalika ITL, Raman Mittal says, “The Union Budget 2018-19’s strong pro-farmer focus can provide a much-need stimulus to the agriculture sector.” Earlier to this Mahadev Chetti, ADG of agriculture education extension for Indian Council for Agriculture Research (ICAR) had already shared his experience with BW Businessworld that “One trained farmer in a village plays role of teacher for another and the chain flows.”

Pradhan Mantri Krishi Sinchai Yojna (the PM agriculture irrigation scheme) with Rs 4000 crore of fund will be covering additional 16 lakh hectare area under micro irrigation. India which enjoys largest irrigated land in world may be benefitted more with the micro irrigation scheme. Apart from the fact that any output projection for agriculture is still very much dependent on monsoon.

A fund of Rs 612.61 crore had been established for blue revolution which has been claimed to achieve 8.9 per cent growth in fish output from the existing rate. What makes this budget important is a 20 per cent growth vision for dairy production by 2020 which may play a key role in achieving doubling farmers’ vision by 2022.

 A Rs 676.86 crore crop science research budget may not be sufficient for a nation which enjoys most vivid climatic zones in the world. It may be though a good move to carry on with much-needed R&D budget. It appears an overestimated rise of 10 per cent in agrarian production by investment of Rs 274.07 crore of fund for agriculture extensions.

The budget may be called as a mix of funds and road maps that may be fruitful to get a three plus gross value added (GVA) by the agriculture. This may well lead to a 7-7.5 per cent growth later on which may lead to a well tracked economy. How agriculture can indirectly impact any sector can be understood from the words of Rajeev Singh, Automotive Sector Leader in Deloitte. Rajeev says, “Rise in MSP of Kharif will lead to a better buying power in rural areas which will directly impact sale of two wheelers in India”. The man who gave the recommendation for input cost in farming plus 1.5 should be the ideal MSP.  Father of green Revolution MS Swaminathan said, “On the whole, this budget addresses some of the hotspot in the field of farming. The most important being the management of monsoon and the market.


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India prioritises rural spending, healthcare in budget as election looms

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NEW DELHI (Reuters) – Eyeing an election next year, India’s government announced massive spending for rural areas and projected economic growth above 8 percent in an annual budget on Thursday that won broad approval from economists, though bond and share markets fell.

Delivering the government’s last full annual budget before a general election to be held by May next year, Finance Minister Arun Jaitley also announced plans for “the world’s largest government funded health care programme”, saying it would cover some 500 million of the country’s poorest people.

He went on to declare intentions to merge three public sector insurance companies and to list the new entity.

Spending in fiscal 2018/19 was projected to increase by 13.2 percent from the current year ending in March, with about three-fifths allocated to better infrastructure in the countryside, where two-thirds of India’s 1.3 billion people live.

“This budget is farmer friendly, common citizen friendly, business environment friendly and development friendly. It will add to ease of living,” Prime Minister Narendra Modi told state-run Doordarshan Television.

Allocating 14.34 trillion rupees ($225.5 billion) for rural infrastructure, Jaitley said the spending should create and new businesses, build new roads, housing, sanitation, and electrification in villages.

The finance minister later told Doordarshan that the largesse was nothing to do with winning votes for Modi’s nationalist Bharatiya Janata Party (BJP).

Analysts thought otherwise.

“It looks like that the BJP is aiming to shore up support among rural voters, there’ve been plenty of measures announced to boost the rural economy,” said Shilan Shah, India economist, at Capital Economics in Singapore. “It was no surprise to us that they relaxed the deficit targets.”.

The budget targeted a fiscal deficit of 3.3 percent of GDP in 2018/19, compared with expectations for a deficit of 3.2 percent.

The 2018/19 deficit target marks some slippage from a previous target of 3.0 percent for the year, and investors were also unnerved by the disclosure that this year’s deficit was likely to come in at 3.5 percent, much higher than expected.

Unlike the bond market, analysts were unalarmed.

Joy Rankothge, vice president at Moody’s Investors Service, said the budget remained broadly in line with the government’s fiscal consolidation path, and reinforced the credit rating agency’s rationale for awarding India last November its first rating upgrade in 14 years.

The deficit numbers were too high for bond investors’ taste as yields for India’s benchmark 10-year bond rose as much as 17 basis points.

A previously buoyant share market also retreated following the imposition of a new tax on long term gains from stocks, though healthcare shares rose thanks to the new health insurance programme.

A man speaks on his mobile phone next to a screen telecasting India’s budget, inside the Bombay Stock Exchange (BSE) building in Mumbai, India, February 1, 2018. REUTERS/Shailesh Andrade

Jaitley cut corporate tax for small firms from 30 percent to 25, but ignored pleas from big companies that had sought a similar reduction to make them competitive with the rest of Asia.

To fund some of the spending, he set a target to raise 800 billion rupees next fiscal year from asset sales, after saying revenue from stake sales this year will reach a record 1 trillion rupees.

The government has already begun the process to sell stakes in two dozen state companies, including flag carrier Air India.

Rahul Gandhi, leader of the main opposition Congress party, said the BJP government was continuing to make empty promises.

The government’s botched roll out of a nationwide goods and service tax (GST) in 2017, and a shock move to ban high value currency notes in late 2016 were partly to blame for economic growth falling to 6.7 percent in the current fiscal year – the slowest in three years.

“Four years gone, fancy schemes with no matching budgets, four years gone, no jobs for our youth,” Gandhi said in a Twitter post.

WEAKER MARKETS

Economists were, however, in broad agreement that the budget should help foster economic growth. A economic survey released by the government earlier this week trumpeted expectations that India would soon become the world’s fastest growing major economy.

Jaitley forecast the economy would grow 7.2 percent in 2018/19 and soon accelerate above 8 percent, the level needed to generate enough jobs for the hundreds of thousands of young people entering the labour market each year.

Already tentative signs of a recovery have emerged.

Prospects of improving corporate earnings have sent shares to a series of record highs. The broader NSE index gained 4.7 percent in January – its best monthly performance since October.

Still, the government desperately needs banks to start lending again to kickstart private investment, and last year it announced an off-budget scheme to inject 2.11 trillion Indian rupees ($33 billion) into its state-run lenders.

The surge in world crude prices, and inflation running at a 17-month high of 5.21 percent and way above the central bank’s 4 percent target were other reasons for caution, but analysts tended toward the positive.

“All-in-all, it was a business-as-usual budget for India and a great one for Bharat (rural India),” Amar Ambani, partner and head of research at IIFL in Mumbai said. “The government did what it thought necessary to boost revenue, revive growth and get election-ready.”

($1 = 64.0450 rupees)

Reporting by Delhi and Mumbai bureaux; Writing by Euan Rocha and Sanjeev Miglani, Editing by Simon Cameron-Moore



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INDIAN (B)

29 pc cut in Cabinet ministers' travelling, other allowances

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New Delhi, Feb 1 (PTI) About Rs 295 crore has been earmarked for expenditure on salaries and travel by Cabinet ministers, ministers of state and ex-prime ministers for the 2018-19 financial year, which is a reduction of 29 per cent from over Rs 400 crore allocated for the ongoing fiscal.

An outlay of Rs 295.81 crore has been made for the council of ministers to meet expenditure on salaries, sumptuary and other allowances and travel by Cabinet ministers, ministers of state and ex-prime ministers.

“This also includes provision for maintenance of aircraft utilised for VVIP travel,” according to the budget presented today by Finance Minister Arun Jaitley.

A total of Rs 418.49 crore has been allocated for this purpose for 2017-18.

About Rs 59.81 crore has been earmarked for meeting the administrative expenses of Cabinet Secretariat and Chemical Weapons Convention (CWC) during 2018-19.

There has been minor increase in budget for the Prime Minister’s Office (PMO).

A total of Rs 50.35 crore has been allocated for meeting the administrative expenses of the PMO during the next fiscal, up more than Rs 2 crore against Rs 48.23 crore for 2017-18.

A sum of Rs 5.22 crore has been allocated for expenditure on government hospitality and entertainment of foreign state guests, official entertainment arranged at the Rashtrapati Bhawan on behalf of the vice president and the prime minister, reception on national days, investiture and ceremonies for presentation of credentials, etc. during 2018-19.

The expenditure under this head for the ongoing financial year is Rs 5.07 crore. PTI AKV TIR

Disclaimer: This story has not been edited by BW staff and is auto-generated from a syndicated feed.


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Budget boosts spending to drive economy, improve Modi's re-election chances

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NEW DELHI (Reuters) – Eying an election next year, the government announced massive spending for rural areas and projected economic growth above 8 percent in an annual budget on Thursday that won broad approval from economists, though bond and share markets fell.

Delivering the last full annual budget before an election that will fall due by May next year, Finance Minister Arun Jaitley allocated 14.34 trillion rupees ($225.50 billion)for rural infrastucture spending and extra support for farmers.

Jaitley also announced plans to introduce “the world’s largest government funded health care programme”, saying it would cover some 500 million of the country’s poorest people. He went on to lay out plans to merge three public sector insurance companies and list the new entity.

Spending in fiscal 2018/19 was projected to increase by 13.2 percent from the current year ending in March, with about three-fifths allocated to better infrastructure in the countryside, where two–thirds of India’s 1.3 billion people live.

“This budget is farmer friendly, common citizen friendly, business environment friendly and development friendly. It will add to ease of living,” Prime Minister Narendra Modi said after the budget announcement.

Jaitley said the spending in rural areas aimed at creating jobs and entrepreneurs, in addition to laying hundreds of thousands of miles of rural roads, building new houses, toilets, and providing electricity.

During his presentation to parliament, Jaitley switched from English to Hindi as he outlined schemes to promote agriculture, organic farming, animal husbandry and fisheries, ensuring that his message got through to rural communities.

The finance minister later told state-run Doordashan Television that the largesse was nothing to do with winning votes for Modi’s nationalist Bharatiya Janata Party (BJP).

Analysts thought otherwise.

“It looks like that the BJP is aiming to shore up support among rural voters, there’ve been plenty of measures announced to boost the rural economy,” said Shilan Shah, India economist, at Capital Economics in Singapore. “It was no surprise to us that they relaxed the deficit targets.”.

The budget targeted a fiscal deficit of 3.3 percent of GDP in 2018/19, compared with expectations for a deficit of 3.2 percent.

A man speaks on his mobile phone next to a screen telecasting India’s budget, inside the Bombay Stock Exchange (BSE) building in Mumbai, India, February 1, 2018. REUTERS/Shailesh Andrade

The 2018/19 deficit marks some slippage from a previous target of 3.0 percent for the year, and investors were also unnerved by the disclosure that this year’s deficit was likely to come in at 3.5 percent, which was much higher than expected.

Unlike the bond market, analysts were unalarmed.

Joy Rankothge, vice president at Moody’s Investors Service, said the budget remained broadly in line with the government’s fiscal consolidation path, and reinforced the credit rating agency’s rationale for awarding India last November its first rating upgrade in 14 years.

The deficit numbers were too high for bond investors’ taste as yields for India’s benchmark 10-year bond rose as much as 17 basis points.

The share market also retreated following the imposition of a new tax on long term gains from stocks, though healthcare stocks rose thanks to the new health insurance progamme.

Regardless of the weaker markets, economists were in broad agreement that the budget should help foster economic growth. A economic survey released earlier this week laid out the government’s expectations that India would soon become the world’s fastest growing major economy.

India’s needs its economy to grow over 8 percent annually to generate jobs for the hundreds of thousands of young people entering the labour market each year.

Jaitley predicted growth would be above 8 percent soon, but for 2018/19 the economy was expected to expand by 7.2 percent, improving from 6.7 percent for the fiscal year ending in March, which was weakest performance in three years.

This year’s growth was slowed by the botched rollout of a nationwide goods and service tax (GST) in 2017, and a shock move to ban high value currency notes in late 2016.

“All-in-all, it was a business-as-usual budget for India and a great one for Bharat (rural India),” Amar Ambani, partner and head of research at IIFL in Mumbai. “The government did what it thought necessary to boost revenue, revive growth and get election-ready.”

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Reporting by Delhi and Mumbai bureaux; Writing by Euan Rocha and Sanjeev Miglani, Editing by Simon Cameron-Moore



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Budget addresses "real things": AP finance minister

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Amaravati, Feb 1 (PTI) Andhra Pradesh Finance Minister Yanamala Ramakrishnudu today welcomed the Union Budget 2018-19 saying it “addressed the real things” with more focus on the rural economy and the agriculture sector.

He, however, was “not happy” that Union Finance Minister Arun Jaitley did not touch upon issues related to Andhra Pradesh, in the budget speech.

Asked if the budget was an indicator of early elections, he remarked, “May be.”

“We don’t know what’s in their minds,” he said.

Addressing at a press conference in the state secretariat, Ramakrishnudu said, “Call it an election budget or anything else, but we are happy they are addressing the real things.”

He said the agriculture sector has been given top priority in the budget and “there is more concentration on the rural economy and the health sector.”

“The budget needs to be welcomed,” he said.

He, however, said Jaitley “did not touch our state in the budget speech.”

“Unless we read the various budget volumes, we will not know how much we will get under different schemes,” Ramakrishnudu said.

He said overall, there are many welcome features in the Union Budget.

“It supports the farming sector since ours is an agro-economy and farmers are in distress. The budget will address this,” he pointed out.

He said there was also focus on improving the rural connectivity while creation of long-term irrigation fund was another welcome feature.

“Another significant feature is the thrust sought to be given to the micro, small and medium enterprises sector. That is very much required since the MSMEs are in a bad shape. Even in AP, 6,000 MSMEs are in doldrums and need to be revived,” the state finance minister said.

The Bharat Mala and Coastal Corridor projects would benefit the state as well, he added.

Speaking on the state-specific issues, Ramakrishnudu regretted that the Union minister did not make any mention of the two Metro rail projects proposed in AP (at Visakhapatnam and Vijayawada).

There was no announcement on setting up a new railway zone at Visakhapatnam.

“It’s a policy decision to be taken but it is disappointing that no announcement has been made on this,” the minister observed. PTI DBV GK

Disclaimer: This story has not been edited by BW staff and is auto-generated from a syndicated feed.


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INDIAN (B)

Shell poised to dethrone Exxon in oil titans' cash clash

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LONDON (Reuters) – Royal Dutch Shell could usurp its largest rival Exxon Mobil as the energy sector’s biggest cash generator after higher oil and gas prices combined with an improved performance lifted its 2017 revenue.

Chief Executive Ben van Beurden has made no secret of his desire to challenge the dominance of the world’s largest listed oil company after its $54 billion purchase of BG Group in 2016 catapulted Shell into second place in terms of production.

The Anglo-Dutch company on Thursday reported a more than doubling of profit in 2017 to $16 billion, the highest since the start of the 2014 downturn as the effect of years of costs cuts and the integration of BG Group filtered through.

“We enter 2018 with continued discipline and confidence, committed to the delivery of strong returns and cash,” van Beurden said in a statement.

Shell’s shares were 1.1 percent lower at 0842 GMT, compared with a slightly positive open for the FTSE 100 index.

Cash flow from operations in 2017 rose to $35.65 billion from $20.62 billion a year earlier, putting Shell on course to beat Exxon, which is forecast to have generated $32.6 billion in 2017, according to estimates by Jefferies analysts. Exxon reports earnings on Friday.

The rise was driven by a sharp recovery in oil prices in the second half of 2017, as the benchmark Brent price reached a three-year high of $70 a barrel.

But it was also due to a sector-wide drive to reduce costs to adapt to a world of “lower for longer” oil prices, as Shell and others cut thousands of jobs and lowered spending.

As a result Shell can now generate more cash than it did with oil prices above $100 a barrel and in November it raised its cash flow outlook from $25 billion to $30 billion by 2020, assuming an oil price of $60 a barrel.

Free cash flow — cash available to pay for dividends and share buybacks — rose to $27.6 billion from a negative $10.3 billion in 2016.

On a quarterly basis, however, Shell’s cash flow was down 21 percent at $7.25 billion, lower than expected, Biraj Borkhataria, analyst at RBC Capital Markets said in a note.

“Shell has had a good year overall and we don’t want to read too much into one set of numbers,” he said.

Shell in the fourth quarter scrapped its scrip dividend, in a sign that it is confident of being able to maintain around $15 billion in annual dividend payments without resorting to scrip or borrowing after a three-year oil price downturn.

ASSET SALES

Shell’s oil and gas production in the fourth quarter rose from the previous quarter to 3.756 million barrels of oil equivalent per day (boed) from 3.657 million boed, but on a yearly basis, it fell 4 percent as a result of asset sales.

Production was expected to come down by 270,000 boed in 2018 as a result of divestments, including the sale of a North Sea portfolio to Chrysaor and its stake in Woodside Petroleum.

Shell announced the sale of its stake in the Bongkot gas field and adjoining acreage offshore Thailand to PTT Exploration & Production PCL for $750 million on Wednesday and is on track to hit a $30 billion asset sale target.

Capital expenditure in 2017 was $24 billion, slightly lower than the $25-$30 billion range Shell set until 2020.

On a quarterly basis, Shell’s profit, based on a current cost of supplies (CCS) and excluding identified items, rose by 140 percent to $4.3 billion, slightly ahead of forecasts.

Shell said its gearing dropped to 24.8 percent from a peak of 29.2 percent in the third quarter of 2016 as it cut its debt to $74.65 billion.

And while it took a $2 billion charge due to new U.S. tax rules, Shell expects a longer-term boost.

Reporting by Ron Bousso; editing by Jason Neely and Alexander Smith



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INDIAN (B)

India unveils 2018/19 budget aiming faster growth

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NEW DELHI (Reuters) – India’s government began unveiling its 2018/19 federal budget on Thursday aiming for stronger economic growth to win over voters ahead of a national election next year while trying to maintain fiscal restraint.

Farm incomes have fallen and Prime Minister Narendra Modi’s administration has failed to deliver enough jobs to employ the mass of Indian youth joining the labor market each year, fueling discontent in the countryside where two-thirds of Indians live.

To the thumping of desks from partymen, Finance Minister Arun Jaitley rose in the lower house of parliament to deliver what is likely to be the last full year budget ahead of an election that must be held by May 2019.

Gross domestic product is expected to grow 6.5 percent to 6.75 percent in 2017/18 — its slowest pace in three years — while many other emerging markets are enjoying a synchronized revival.

While growth has been slowed by the botched rollout of a nationwide goods and service tax (GST) in 2017, and a shock move to ban high value currency notes in late 2016, investors have so far looked beyond the setbacks, perceiving the initiatives as positive long term.

To keep investors on side however, Jaitley will have to convince them that he plans to keep to his word on working towards reining in the fiscal deficit, one of Asia’s largest.

A Reuters poll this week showed most economists expect a 3.2 percent deficit in 2018-19, as the government looks to increase investments in areas such as agriculture. Anything much beyond that, however, may draw a swift sell-off in the markets.

Reporting by Delhi and Mumbai bureaux; Writing by Euan Rocha and Sanjeev Miglani, Editing by Simon Cameron-Moore



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