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Budget 2018 key highlights: Jaitley speech focuses on populism

Monitor News Bureau

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New Delhi :Finance minister Arun Jaitley, who unveiled his last full Budget on Thursday, said India is poised to become $5 trillion economy soon from its current size of $2.5 trillion. The seventh fastest growing economy, India is all set to be the 5th fastest, soon, promised Jaitley.
Agriculture and health dominated Jaitley’s two-hour Budget speech. Employment and education were also focus areas. MSMEs found special mention in the Budget, with measures ranging from tax sops to easier access to loan.
Here are the highlights of Arun Jaitley’s speech:
Startups
* VCFs, angel investors to get new measures for growth and new tax rules to increase funding of startups.
Custom duty/Cess
* Imported electronics, including phones and TVs, will now get more expensive as government proposes to increase custom duty on mobiles from 15% to 20% and on some other mobile parts to 15%, and some parts of TVs to 15%.
* Propose to increase the health and education cess to 4%
Personal/Corporate Tax
* Personal Income Tax: No change
* Relief to salaried tax: Standard deduction increased for transport and medical reimbursement to Rs 40,000 from Rs 15,000
* Rs 50,000 additional benefit to senior citizens for investment in mediclaim.
* Propose to tax long term capital gains exceeding Rs 1 lakh in listed stock at 10%.
* 100% tax exemption for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above.
* 41% more returns were filed this year, which shows that more people have joined the tax net.
* Tax payer base has risen from 6.47 crore in 2014-15 to 8.27 crore in 2016-17. More payers joining tax net but turnover not encouraging, says Jaitley.
* Demonetisation was received by honest taxpayers as ‘Imaandaari ka utsav’.
Fiscal deficit
Revised fiscal deficit estimate for 2017-18 is 3.5% of GDP, fiscal deficit of 3.3% expected for 2018-19.
Telecom
* Government proposes to set up 5 lakh wifi-hotspots that will provide internet to five crore rural citizens in 2018-19.
* Government provided Rs10,000 crore for creation and augmentation of telecom infrastructure in 2018-19.
* Department of Telecom will support the setting up of indigenous 5G centre at IIT Madras.
* Government doesn’t consider cryptocurrencies as legal tender or coins. Will take all measures to prevent use of crypto-assets to finance illegitimate activities.
Rail budget
* Rs 1,48,528 crore is the capital expenditure for the Indian Railways for 2018-19… All trains to be progressively provided with WiFi, CCTV and other state-of-the-art amenities.
* All railways stations with more than 25,000 footfall to have escalators.
* 12,000 wagons, 5160 coaches and 700 locomotives being procured. There is significant achievements of physical targets by Railways : Arun Jaitley
* Focus will be on safety, maintenance of railway tracks, increase in use of technology and fog safety devices: FM Jaitley
* Redevelopment of 600 major railway stations has been taken up; Mumbai transport system is being expanded; suburban network of 160 km planned for Bengaluru: FM
* Foundation stone of the bullet train was laid in September 2017. An institute is coming up in Vadodara to train the manpower required for the high speed railway projects: FM Jaitley
* 36,000-km of rail track renewal targeted in coming year: FM Arun Jaitley
Agriculture/Farm
* Agri-Market Development Fund with a corpus of Rs 2000 crore to be set up for developing agricultural markets.
* Grameen Agricultural Market (GRAM) will provide farmers a means to sell directly to buyers.
* The focus is on low-cost farming, higher MSP. Emphasis is on generating farm and non-farm employment for farmers.
* I am very happy to announce that minimum support price has been set at 1.5 times the production cost for kharif crops: Jaitley
* The government will ensure payment of full MSP even if farmers sell below MSP.
* The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost.
Health
* About 10 crore poor and vulnerable families will be targeted under healthcare protection scheme, which will offer up to Rs 5 lakh per family. This will be the world largest government-aided programme.
* As per the national health policy 2017, health and wellness centres will be launched. Around 1.5 lakh centres will provide free essential drugs, maternal and child services. The finance ministry allocated Rs1200 crore for this flagship programme.
* TB patients will get Rs 500 per month for nutritional support.
* At least 24 new government medical colleges and hospitals will be set up by upgrading existing district hospitals.
* Rs 1,200 crore for the flagship programme in health wellness centres.
Women
* Contribution of 8.33% to EPF for new employees by the govt for three years and 12% govt contribution to EPF in sectors employing large number of people: Arun Jaitley
* 76% of MUDRA loans for women.
*Government proposes to increase the target of providing free LPG connections to 8 crore to poor women: FM Jaitley
Education
* 4 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.
* One medical college per every three Parliamentary constituencies.
* 1,000 best BTech students to be made PM research fellows — to do PhDs in IITs and IISc. They will spend few hours every week teaching in technical institutions.
* Eighteen new schools of planning and architecure will be set up… I propose railway university in Vodadara.
* Government to launch ‘Revitalising Infrastructure and Systems in Education by 2022: FM Jaitley
* Integrated B.Ed programme to be initiated for teachers, to improve quality of teachers.
* Technology will be the biggest driver in improving education.
* Budget 2018 will work with states to provide more resources to improve quality of education, says Jaitley.
India growth
* Indian economy is on course to achieve high growth of 8%. Economy to grow at 7.2-7.5% in second half of 2018-19: FM Jaitley.
* India grew at an average of 7.5% in the first three years since 2014. It is now a $2.5 trillion economy: Jaitley.
* Indian economy has performed very well since our government took over in may 2014. It is now the seventh largest in the world, says finance minister Arun Jaitley.
* Government moves to remove stamp duty from financial transactions.
Infrastructure
* To spend 14.34 trillion Indian rupees ($225.50 billion) on rural infrastructure
* NHAI would transfer the road projects into special purpose vehicles to use innovative structures such as infrastructure trusts for fund mobilisation
* Government to use select InvITs for infrastructure funding.
For poor, backward and vulnerable
*By 2022, every block with more than 50% ST population and at least 20,000 tribal people will have ‘Ekalavya’ school at par with Navodaya Vidayalas: FM Jaitley.
* Allocation of Rs. 56,619 crore for SC welfare and Rs. 39,135 crore for ST welfare: FM Jaitley
Connecting India
* Bharatmala project approved for better road connectivity at Rs 5.35 lakh crore.
* UDAN will connect 56 unserved airports in India.
* Airports Authority of India now has 124 airports, this will be expanded by 5 times. Aim of 1 billion trips a year: Arun Jaitley.
Other proposals
* Total 187 projects sanctioned under the Namami Gange programme.
* We aim that by 2022, all poor people have a house to live in.
* Government plans to construct 2 crore more toilets under Swachh Bharat Mission: Arun Jaitley
* Air Pollution in Delhi-NCR is a cause for concern, special scheme will be implemented to support governments of Haryana, Punjab,Uttar Pradesh and Delhi-NCT to address it and subsidise machinery for management of crop residue: FM Jaitley
* Proposal to develop 10 prominent tourist destinations as Iconic tourism destinations.
* AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 core awarded.
* Emoluments of the President to be revised to Rs 5 lakh per month & emoluments of the Vice-president to be revised to Rs 4 lakh per month: Arun Jaitley
* Government is proposing changes in refixing salaries of MPs. Law will provide automatic revision of emoluments of the MPs every 5 years indexed to inflation: FM Jaitley


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RBI to remain watchful on growth, financial stability: Das

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Mumbai: The Reserve Bank of India (RBI) will remain vigilant and strive to revive growth in Asia’s third-largest economy, as well as pushing to maintain macroeconomic, financial and price stability, its governor said in a speech.

India lost momentum in the final quarter of 2018, reducing its annual rate of economic growth to 6.6 percent, the slowest pace in five quarters and much less than expected.

But RBI Governor Shaktikanta Das said the country’s real gross domestic product (GDP) growth was expected to reach 7.2 per cent in the fiscal year to March 2020, which he described as the strongest among the world’s large economies.

 

India’s annual retail inflation rate rose in March to 2.86 per cent, from 2.57 per cent in the previous month, but remained below the central bank’s target for an eighth straight month, increasing the chances for a key interest rate cut in June.

“Inflation has remained below target, averaging 3.6 per cent for the period under the inflation targeting framework so far,” Das said in the speech, uploaded on the RBI website early on Saturday. He said he was referring to the period from October 2016 to February 2019.

The RBI has lowered its retail inflation forecast to 3.8 percent by January-March 2020, but warned it could be higher if food and fuel prices climb abruptly, or if fiscal deficits overshot targets.

India’s current account deficit is expected to be around 2.5 per cent of GDP in 2018-19 and the gross fiscal deficit has kept to budgetary targets, he added.

Das underscored the risks facing emerging market economies such as a India as global growth and trade weaken.

“There is considerable uncertainty as to whether this weakness is temporary or the beginning of a recession in advanced economies,” Das said, adding that central banks around the world were not tightening monetary policy, with some even promoting easier lending conditions.

The RBI cut its policy interest rate by 25 basis points earlier this month, in a widely expected move to boost the economy at a time Prime Minister Narendra Modi is seeking a second term in a national election.

Emerging market economies also remain exposed to financial market volatility, Das said, and financial conditions could heighten existing stress on the balance sheets of lending institutions in some countries.

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At 0.1%, India’s industrial growth falls to 20-month low in February

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New Delhi: A contraction in manufacturing output, especially in the sensitive capital and consumer goods segment, pulled down industrial growth to a 20-month low of just 0.1 per cent in February.

The bottom crawling growth rate follows a 1.43 per cent growth in the previous month of January. The index of industrial production (IIP) has witnessed low growth since November, 2018, and is expected to remain muted owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome, according to economists.

In the April-February period of the current financial year, industrial output grew at 4 per cent, as against 4.3 per cent in the same period of the previous financial year.

 

The manufacturing segment, which constitutes the bulk of the index of industrial production (IIP) at 77.6 per cent, contracted by 0.3 per cent in February against an equally small rise of 0.93 per cent in January. Before, this, the December 2018 manufacturing number of 2.95 per cent. The numbers show continued volatility in the IIP, despite change in the index last year.

Most of all, the capital goods segment, which connotes investments, saw output growth turning to negative with an 8.8 per cent contraction, as compared to a 3.42 per cent contraction in the previous month.

Driven by machinery and heavy transport, capital goods production had been on a solid upward swing till October.

“The capital goods sector, which had shown an average growth of 8.9 per cent during April-October period in FY19 and raised hopes of an incipient investment recovery in the economy is once again appearing to be losing steam. With the exception of December 2018, capital goods are recording negative growth in each month since November,” Devendra Kumar Pant, Chief Economist at India Ratings and Research, said.

In January, the growth rate for consumer durables also fell to 1.2 per cent, from the 2.3 per cent growth in January. “A 1.2 per cent consumer goods production is also reflective of inventories that have built up in Q3, when capacity utilisation also improved. But, with demand tapering off, production has slowed down,” Madan Sabnavis, chief economist at CARE Ratings, said.

On the other hand, consumer non-durables commanded a growth rate of 4.3 per cent in February, up from 3.3 per cent in January. All other user-based segments either showed a negative growth or low-single digit growth.

Overall IIP growth for the entire year would be about 4.5 per cent, which is half per cent lower than what we had projected earlier, Sabnavis added.Of 23 sub-sectors within manufacturing, 13 recorded a year-on-year contraction, compared to 11 in January. Slowdown in major sectors such as metals and refined petroleum brought down overall growth. On the other hand, apart from furniture and food manufacturing, which saw healthy growth in the financial year, computer hardware production managed to see a healthy growth.

This is after the government pushed manufacturing in the sector on a sustained basis over the past nine months, through a series of benefits and the phased manufacturing programme aimed to reduce imports of electronics goods.

The two other sectors in the IIP — electricity and mining — also saw muted growth in February, data released on Friday showed.

Electricity generation rose 1.2 per cent in the latest month, slightly more than the 0.93 per cent rise in January. On the other hand, mining output grew by 2 per cent in February, against a 3.92 per cent rise in January.

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TCS net profit up 17.7% to Rs 8,126 crore in Q4, crosses $20-bn revenue

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Mumbai: Tata Consultancy Services (TCS) on Friday reported robust numbers both for the fourth quarter of 2018-19 and the full financial year, with the country’s largest IT services company crossing the $20-billion revenue mark for the first time. Growth in net profit as well as revenue exceeded Street expectations, though margin contracted a bit in the fourth quarter.

For the quarter ended March 31, TCS reported Rs 8,126 crore in net profit, a jump of 17.7 per cent over the corresponding quarter last year. Revenue, at Rs 38,010 crore, saw an increase of 18.5 per cent on a year-on-year (y-o-y) basis. When compared with the trailing quarter, net profit was almost flat, while revenue grew 1.8 per cent.

A survey by Bloomberg based on consensus analysts’ estimates had pegged TCS’ revenue and net profit at Rs 37,829.1 crore and Rs 7,970.7 crore, respectively. “This is a year when TCS has fired from all cylinders, and we are exiting the year on a much stronger note than how we entered it,” CEO and MD Rajesh Gopinathan said during a post-earnings interaction with media. “This is the strongest revenue growth that we have had in the last 15 quarters. Our order book is bigger than (what it was in) the previous three quarters. The deal pipeline is also robust,” Gopinathan added.

 

For FY19, TCS reported Rs 31,472 crore in net profit, an increase of 21.9 per cent over the previous fiscal year, while revenue at Rs 1.46 trillion was 19 per cent higher than FY18’s.

For the first time, TCS crossed $20 billion in its dollar revenue, posting $20.91 billion in top line in FY19, a growth of 9.6 per cent over the previous year, while it widened the revenue gap with the closest Indian competitor, Infosys, by $9.1 billion. In constant currency terms, it maintained double-digit revenue growth and grew 11.4 per cent.

Operating profit margins for Q4 as well as the full year, however, were marginally lower than the expectations and came below the guided range of 26-29 per cent. In the quarter under review, margins at 25.1 per cent saw a 50 basis point decline over the previous quarter, while margins for the full year stood at 25.6 per cent, up 79 bps.

The firm added six clients, each contributing revenues in excess of $100 million during FY19, while the employee headcount addition stood robust. The year ended with 4,24,285 employees, almost 30,000 higher than last year. Attrition at 11.3 per cent was one of the lowest in industry.

TCS continued to witness strong growth in its digital business, which accounted for 31 per cent of the overall revenue. Banking, financial services & insurance, which lagged other verticals, rebounded to double-digit growth with an increase of 11.6 per cent in the March quarter, although for the full year, it was 7.7 per cent.

chart In terms of geographies, North America business grew 9.9 per cent y-o-y (constant currency terms) in Q4, while for the full year, growth was 8.3 per cent. The UK, where TCS has the highest exposure compared with other Indian peers, saw maximum growth with revenues from the country rising 21.3 per cent y-o-y for the quarter and 22 per cent for the full year.

“Deals have come from many different markets and verticals. These give us the confidence that we’ll continue the momentum. Last year, we had very large segments that were dragging with growth of less than 2-3 per cent. We now have a benefit of a few large deals, so almost all segments are growing on a par with the company average,” Gopinathan said.

“TCS has delivered a decent set of numbers for Q4FY19, which beat estimates on the revenue and net profit fronts. Reported EBIT margins missed our estimates, though adjusted for Rs 220 crore contribution to electoral trust in Q4, margin was higher than estimates,” said Sanjeev Hota, AVP Research at Sharekhan.

The company reported deal TCV (total contract value) of $6.2 billion compared to $5.9 billion in the last quarter.

TCS said that like the previous year, it would start rolling out salary hikes in the range of 2-6 per cent based on geographies the employees are located, and some other metrics. In Q4 of last year, the company had doled out 120 per cent variable payouts, which will be 100 per cent this year.

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