Budget 2017-18 Moderators CA. T .V. Mohandas Pai and CA. H. - PowerPoint PPT Presentation

Analysis of Union Budget 2017-18 Moderators CA. T .V. Mohandas Pai and CA. H. Padamchand Khincha

India at a glance 1.31 bn Jan 2017 estimates Population Population Growth Rate 1.3% Census 2011 Life Expectancy: Male 67.3 yrs 2016 Life Expectancy: Female 69.8 yrs 2016 Literacy 79% 2016-17(E) GDP (at current prices) US$ 2,251 bn 2016-17 (E) Real GDP growth 6.5% to 6.75% 2016-17 (E) GDP (in PPP) 3 rd Largest Economy US $8,721 bn 2016 Per capita Income (nominal) US $1,724 2016 -17 Exports US $ 200 bn 2016-17 (till Dec) Imports US $ 275 bn 2016-17 (till Dec) Foreign Exchange Reserves US $ 361 bn At Jan 2017 Government External Borrowings US $ 93 bn At Dec 2016 External Debt (Govt & Non-Govt) US $ 484 bn At Sept 2016 Interest to Gross Revenue 23.7% 2016-17 RE Gross Debt / GDP ratio 69.0% 2016-17(E) 02-02-2017 2

India – Key Economic Indicators 2017 vs. 1991 ….. 26 years’ snapshot post liberalisation 2017 1991 CAGR Population (Bn) 1.31 0.89 1.5% Life expectancy (Years) 68.5 58.8 0.6% Literacy rate 79% 52% 2.1% GDP Growth Rate 6.5% to 6.75% 5.3% GDP (at current prices) - INR cr 15,133,473 531,814 13.7% GDP (at current prices) - US $ Bn 2,251 275 8.4% Per capita income (nominal) - US $ 1,724 310 6.8% Exports - US $ Bn 2016-17 (till Dec 16) 200 18 9.7% Imports - US $ Bn 2016-17 (till Dec 16) 275 24 9.8% Share in world trade (exports + imports) 4.2% 1.0% 5.7% Foreign Currency Reserves - US $ Bn 361 5.8 17.2% Exchange Rate (US $) 67.23 17.9 5.2% Savings Rate 31.0% 22.9% 1.2% Investment Rate 34.2% 22.5% 1.6% 02-02-2017 3

India’s GDP Growth % - Last 11 Years 12.0 10.0 9.6 9.3 8.9 8.6 8.0 7.6 7.2 6.8 6.7 6.7 6.6 6.0 5.6 4.0 2.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GDP expected to grow approximately @ 6.75 % - 7.5 % in 2017-18 02-02-2017 4

India – GDP Projection To be a $ 10 trillion economy in 2035, India needs to grow at a CAGR of 8.3% p.a. China’s GDP grew at an average of 9.9% p.a. from 1979 to 2011 02-02-2017 5

The World is Changing … GDP 2016(E) GDP 2021 GDP 2031 CAGR Regions $ Trilliion $ Trilliion $ Trilliion 2016-2031 US 18.6 19.0 25.0 2.0% EU 17.1 20.0 23.0 2.0% Japan 4.7 7.0 7.0 2.7% Total OECD 40.4 46.0 55.0 2.08% China 11.4 13.0 23.5 5.0% India 2.3 3.5 7.1 8.0% Others 21.2 39.5 70.4 8.3% Total: RoW 34.8 56.0 101.0 7.4% Total Global 75.2 102.0 156.0 5.0% 02-02-2017 6

Trends in Inflation (CPI) 12 10.4 10.2 10 9.5 8.4 8 5.9 6 4.9 4.9 4 2 0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 02-02-2017 7

India & China – at a glance ……………..China has grown faster India China Population 2017 (E) 1.31 bn 1.38 bn Population Growth Rate Census 2011 1.30% 0.43% Life Expectancy: Male 2016 67.3 yrs 74.6 yrs Life Expectancy: Female 2016 69.8 yrs 77.6 yrs Literacy 2016-17(E) 79.0% 96.4% GDP (at current prices) Oct 2016 US$ 2,251 bn US $ 12,263 bn Real GDP growth 2016 6.5% to 6.75% 6.6% GDP (in PPP) 2016 US $ 8,721 bn US $ 21,270 bn Per capita Income (nominal) 2017 US $ 1,724 US $ 8,886 Exports 2016-17 (till Dec 16) US $ 200 bn US $ 2,011 bn (CY) Imports 2016-17 (till Dec 16) US $ 275 bn US $ 1,437 bn (CY) Foreign Currency Reserves At Jan 2017 US $ 361 bn US $3,092 bn External Debt At Sept 2016 US $ 484 bn US $ 984 bn Gross Debt / GDP ratio 2017 (E) 69% 260% 02-02-2017 8

SIRC of ICAI Trends in Fiscal Deficit (Rs. cr) 600,000 546,532 534,274 532,791 524,539 515,990 510,725 490,190 500,000 418,482 400,000 373,592 336,992 300,000 200,000 100,000 - 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 (RE) 2017-18 (BE) 02-02-2017 9

SIRC of ICAI Trends in Revenue and Fiscal Deficit (% of GDP) 8.0 6.5 6.0 5.7 7.0 6.0 4.8 4.8 4.1 4.6 5.0 3.9 Revenue Deficit 4.4 5.2 4.0 2.5 4.5 3.2 3.0 3.2 3.6 3.2 2.0 2.9 Fiscal Deficit 3.3 1.9 1.0 2.5 2.1 0.0 1.1 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 (RE) (BE) 02-02-2017 10

Video 1 • Transformative Shift • FM Speech – Para 3 • “ In the last two and half years, it has been our mission to bring a Transformative Shift in the way our country is governed. We have moved from a discretionary administration to a policy and system based administration; from favouritism to transparency and objectivity in decision making; from blanket and loose entitlements to targeted delivery; and from informal economy to formal economy. Inflation, which was in double digits, has been controlled; sluggish growth has been replaced by high growth; and a massive war against black money has been launched. We have worked tirelessly on all these fronts and feel encouraged by the unstinted support of the people to our initiatives. The Government is now seen as a trusted custodian of public money. I take this opportunity to express our gratitude to the people of India for their strong support ” 02-02-2017 11

SIRC of ICAI Performance in 2016-17 • Transformative shift in administration in the last 2.5 years -- discretionary administration to a policy and system based administration -- favoritism to transparency and objectivity in decision making -- blanket and loose entitlements to targeted delivery -- informal economy to formal economy • CPI-based inflation declined from 6% in Jul’16 to 3.4% in Dec’16 . Inflation was 4.9% in H1 2016-17 • Economy moved on a high growth path 02-02-2017 12

SIRC of ICAI Performance in 2016-17 • India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the H1 2016-17 • FDI grew 36% in H1 2016-17 over H1 2015-16 to Rs.1.45 lakh cr, despite 5% reduction in global FDI inflows • Foreign exchange reserves have reached $361 billion, cover for about 12 months of imports • War against black money launched • Fiscal consolidation continued without compromising on public investment • India to be one of the fastest growing major economies in 2017 02-02-2017 13

SIRC of ICAI Performance in 2016-17 • Agenda for 2016- 17 was to “Transform India”, with 9 distinct pillars • Has the FM met the Agenda? • Your rating of Govt. performance during 2016-17? 02-02-2017 14

Is the Budget Credible? The RE continues to be higher than the BE for the 2 nd year……. Rs cr 2012-13 2013-14 2014-15 2015-16 2016-17 BE Actual BE Actual BE Actual BE Actual BE RE Receipts 12,42,226 11,73,590 14,08,122 13,37,604 15,77,029 14,42,742 16,71,223 17,06,908 19,53,809 20,38,013 Tax Receipt 10,77,612 10,36,235 12,35,870 11,38,734 13,64,524 12,44,885 14,49,490 14,55,648 16,30,888 17,03,243 Non Tax 1,64,614 1,37,355 1,72,252 1,98,870 2,12,505 1,97,857 2,21,733 2,51,260 3,22,921 3,34,770 Revenue Expenditure 14,90,925 14,10,367 16,65,297 15,59,447 17,94,892 16,63,673 17,77,477 17,90,783 19.78,060 20,14,407 Subsidies 1,90,015 2,57,079 2,31,084 2,54,632 2,60,658 2,58,258 2,43,811 2,41,833 2,33,835 2,32,705 GDP growth 13.9 13.3 10.8 8.6 7.9 rate % 02-02-2017 15

Is the Budget Credible? Two consecutive years of actual growth @ 17% 2013-14 2014-15 2015-16 2016-17 RE 2017-18 (BE over RE) Budgeted Tax Revenue growth % 15% 10% 6% 18% 12% Actual Tax Revenue Growth % 10% 9% 17% 17% Actual Total Receipts % of BE 95% 91% 102% 104% Actual Subsidy % of BE 110% 99% 99% 100% 02-02-2017 16

Video 2 Roadmap and priorities • FM Speech – Para 19 • “ we are aware that we need to do more for our people. Continuing with the task of fulfilling the people’s expectations, our agenda for the next year is : “Transform, Energise and Clean India”, that is, TEC India. This agenda of TEC India seeks to: • Transform the quality of governance and quality of life of our people; • Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential; and • Clean the country from the evils of corruption, black money and non-transparent political funding • I propose to present my Budget proposals under ten distinct themes to foster this broad agenda .” 02-02-2017 17

SIRC of ICAI Roadmap and priorities • Agenda for 2017-18 is TEC India -- “Transform, Energise and Clean India”. Seeks to: a. Transform the quality of governance and life of our people b. Energise various sections of society, especially the youth and the vulnerable c. Enable them to unleash their true potential d. Clean the country from the evils of corruption, black money and non transparent political funding 02-02-2017 18