Presenting the Union Budget 2018, Finance Minister Arun Jaitley on Thursday projected fiscal deficit for the year 2018-19 at 3.3% of the Gross domestic product (GDP).
Presenting the Union Budget 2018, Finance Minister Arun Jaitley on Thursday projected fiscal deficit for the year 2018-19 at 3.3% of the Gross domestic product (GDP).
Fiscal deficit estimate for 2017-18 has been now raised to 3.5%c of GDP as against 3.2% earlier. Jaitley had pegged fiscal deficit at 3.2% of gross domestic product (GDP) for 2017-18 in the Budget last year.
A Reuters poll this week showed most economists expect a 3.2% 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.
Investors were already spooked this week after India’s chief economic advisor Arvind Subramanian, in an economic survey ahead of the budget, suggested “a pause” in the fiscal consolidation path, while the government attempts to reinvigorate growth.
While growth has been slowed by 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.
Shares fell for a second consecutive session on Wednesday, as investors opted to book profits ahead of the budget, with markets trading near all-time highs. The benchmark 10-year bond yield closed flat at 7.60% on Wednesday, but it is up 13 basis points from its close on Friday after Subramanian’s comments.
GDP 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.
Here are key highlights of the Union Budget so far:
* 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"
* To spend 14.34 trillion Indian rupees ($225.50 billion) on rural infrastructure
* 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.
*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 scheme for governments around Delhi to address air pollution.
* Railways' capital expenditure to be Rs 1.48 lakh cr in 2018-19.
Catch live updates of Union Budget 2018 here.
(With Reuters inputs)
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