Analysis by Shyam S Kaggod€¦ · •Modicare-mother of all schemes? •Customs Duty hike...
Transcript of Analysis by Shyam S Kaggod€¦ · •Modicare-mother of all schemes? •Customs Duty hike...
Analysis byShyam S Kaggod
Points to be covered• Situation of the economy at the juncture of the budget
• Important areas• Agriculture
• Modicare-mother of all schemes?
• Customs Duty hike
• Corporate Tax
• LTCG reintroduced
• MSME sector
• Subsidies
• Jobs
• Infrastructure
• Financials-Disinvestment, Fiscal Deficit, Revenue Deficit
Situation of the Economy• EoDB report
• SCR upgrade
• IBC one year
• Recapitalisation of the banking sector
• Demonetization
• GST
• Slowdown in the economic growth
• Investment lower
• Increasing crude oil prices leading to worries in inflation
Agriculture
• MSP (will it become a political trap?)
• Farmer Producer Organizations
• Institutional Credit
• Operation Greens
• GrAMS (Grameen Agricultural Markets)
• Green Gold
• KUSUM (Kisan Urja Suraksha evam Utthaan Mahabhiyan)
MSP
Social Sector
• National Health Protection Scheme
• Develop 150,000 rural care centers
• Ekalavya Model Residential Schools
• Revitalizing Infrastructure and Systems in Education (RISE) by 2022
Jobs
• Package for textile sector
• Contribution of women employees to EPF
• Credit support, capital and interest subsidy and promotion of innovations
Industries
• MSME sector
• Merger of three insurance companies• National Insurance Co• Oriental Insurance Co• United Assurance Co
• Customs duty hike
• EoDB
Taxation• FPOs-100% tax deduction
• Health and Education cess - 4%
• A Standard Deduction of ₹ 40000
• CBEC to CBIC
• Corporate tax reduced to 25% for companies reporting a turnover of up to ₹ 250 Cr
• LTCG on stocks reintroduced
Corporate Taxes
New Definition for MSMEs – Revenue Based• Micro - Up to ₹ 5 Cr• Small - above ₹ 5 Cr and Up to ₹ 75 Cr• Medium - above ₹ 75 Cr and Up to ₹ 250 Cr
Long Term Capital Gains (LTCG) Tax• LTCG on stocks was scrapped in 2004-05
• Investors will have to pay 10 per cent tax on profit exceeding ₹ 1 lakh made from the sale of shares or equity mutual fund schemes held for over one year
• Grandfathering clause applicable for the investments made till 31st Jan 2018 (Fair Market Value - acquisition price or closing price whichever is higher)
• LTCG only if the profits are higher than ₹ 1 lakh
• Will come into force from 1st April 2018
Long Term Capital Gains (LTCG) Tax
Infrastructure
• Infrastructure financing needs of ₹ 50 lakh Cr
• New generation of Airports for Bharat (NABH)
• Ten prominent tourist sites into Iconic Tourism destinations
• Bharatmala Pariyojana
Subsidies
Disinvestment
Deficits
N K Singh Committee Recommendations
• Draft Debt Management and Fiscal Responsibility Bill, 2017
• Debt to be used as the primary target for fiscal policy
• Autonomous Fiscal Council
Deficit
Year Debt to GDP FD
2018-19 48.8% 3.3%
2019-20 46.7% 3.1%
2020-21 44.6% 3.0%
Growth Expectations
• GDP growth of • FY18-6.5%
• FY19-7.2%
• Having said so, there are some concerns• GST related issues
• Monsoon
• Rising oil prices
• Capital flows
ConclusionThe budget scores in
• Agriculture sector
• Health sector
• Corporate taxes
• Disinvestment targets
The budget falls short in
• Job creation
• Fiscal deficit and revenue deficit
• Promotion of make in india though customs duty hike
• Revival of capex