Analysis of Union Budget 2018-19 Moderators CA. T .V. Mohandas Pai and CA. H. Padamchand Khincha SIRC of ICAI
India at a glance India at a glance Population 1.35 bn Jan 2018 (E) Population Growth Rate 1.3% Census 2011 Life Expectancy: Male 67.6 yrs 2018 (E) Life Expectancy: Female 70.1 yrs 2018 (E) Literacy 79% 2018 (E) GDP (at current prices) US$ 2,603 bn 2018 (E) Real GDP growth 6.5% 2018 (E) GDP (in PPP) 3 rd Largest Economy US $9,447 bn 2017 (E) Per capita Income US $1,928 2018 (E) US $ 297 bn Exports 2018 (E) Imports US $ 451 bn 2018 (E) Foreign Exchange Reserves US $ 414 bn Jan 2018 (E) Government External Borrowings US $ 95.8 bn 2018 (E) External Debt (Govt & Non-Govt) US $ 495.7 bn Sep 2017 (E) Interest to Gross Revenue 24.0% 2018 (E) Gross Debt / GDP ratio 69.5% 2018 (E) 02-02-2018 SIRC of ICAI 2
India – Key Economic Indicators 2018 vs. 1991 ….. 27 years’ snapshot post liberalisation 2018 1991 CAGR 1.35 0.89 1.6% Population (Bn) 69 58.8 0.6% Life expectancy (Years) 79% 52% 2.1% Literacy rate 6.5% 5.3% GDP Growth Rate 1,67,84,679 5,31,814 13.6% GDP (at current prices) - INR cr 2,603 275 8.7% GDP (at current prices) - US $ Bn 1,928 310 7.0% Per capita income - US $ 297 18 10.9% Exports - US $ Bn 2018 (E) 451 24 11.5% Imports - US $ Bn 2018 (E) Share in world trade (exports + imports) 4% 1% Foreign Currency Reserves - US $ Bn 414 5.8 17.1% Exchange Rate (US $) 64.49 17.9 4.9% Savings Rate 28.0% 22.9% Investment Rate 30.0% 22.5% 02-02-2018 SIRC of ICAI 3
India’s GDP Growth % - Last 11 Years GDP expected to grow approximately @ 7.4% in 2018-19 02-02-2018 SIRC of ICAI 4
India – GDP Projection To be a $ 10 trillion economy in 2035, India needs to grow at a CAGR of 8.5+% p.a. China’s GDP grew at an average of 9.9% p.a. from 1979 to 2011 02-02-2018 SIRC of ICAI 5
The World is Changing … GDP 2016(E) GDP 2021 GDP 2031 CAGR Regions $ Trilliion $ Trilliion $ Trilliion 2016-2031 US 18.6 21.0 26.9 2.5% EU 17.1 18.4 21.4 1.5% Japan 4.7 4.9 5.5 1.0% Total OECD 40.4 44.4 53.8 1.9% China 11.4 15.3 24.9 5.3% India 2.3 3.5 8.6 8.5% Others 21.2 28.4 50.8 6.0% Total: RoW 34.9 47.2 84.3 6.0% Total Global 75.3 91.6 138.1 4.0% 02-02-2018 SIRC of ICAI 6
India & China – at a glance ……………..China has grown faster India China Estimates as of Population 2018 (E) 1.35 bn 1.42 bn Population Growth Rate Census 2011 1.30% 0.39% Life Expectancy: Male 2018 (E) 67.6 yrs 75 yrs Life Expectancy: Female 2018 (E) 70.1 yrs 78 yrs Literacy 2018 (E) 79.0% 96.4% GDP (at current prices) 2018 (E) US$ 2,578 bn US $ 13,338 bn Real GDP growth 2018 (E) 6.5% 6.9% GDP (in PPP) 2017 (E) US $ 9,447 bn US $ 23,120 bn Per capita Income 2018 (E) US $ 1,928 US $ 9,392 Exports 2018 (E) US $ 233 bn US $ 2,157 bn Imports 2018 (E) US $ 338 bn US $ 1,731 bn Foreign Currency Reserves Jan 2018 (E) US $ 414 bn US $3,140 bn External Debt Sep 2017 (E) US $ 496 bn US $ 1,649 bn Gross Debt / GDP ratio 2018 (E) 69.5% 260% 02-02-2018 SIRC of ICAI 7
Video 1 • Governance, Economy & Development • FM Speech – Para 2 & 3 • “Madam, four years ago, we pledged to the people of India to give this nation an honest, clean and transparent Government. We promised a leadership capable of taking difficult decisions and restoring strong performance of Indian economy. We promised to reduce poverty, expedite infrastructure creation and build a strong, confident and a New India. When our Government took over, India was considered a part of fragile 5; a nation suffering from policy paralysis and corruption. We have decisively reversed this. The Government, led by Prime Minister, Shri Narendra Modi, has successfully implemented a series of fundamental structural reforms. With the result, India stands out among the fastest growing economies of the world. • The journey of economic reforms during the past few years has been challenging but rewarding. As a result of the reforms undertaken by the Government, foreign direct investment has gone up. Measures taken by the Government have made it much easier to do business in India. Natural resources are now allocated in a transparent and honest manner. There is a premium on honesty. ” 02-02-2018 SIRC of ICAI 8
SIRC of ICAI Governance, Economy & Development • Has the present Government, led by Prime Minister, Shri Narendra Modi, successfully implemented a series of fundamental structural reforms? • Is there a premium on honesty? 02-02-2018 SIRC of ICAI 9
Video 2 • Agriculture and Rural Economy • FM Speech – Para 11 • “My Government is committed for the welfare of farmers. For decades, country’s agriculture policy and programme had remained production centric. We have sought to effect a paradigm shift. Honourable Prime Minister gave a clarion call to double farmers’ income by 2022 when India celebrates its 75th year of independence. Our emphasis is on generating higher incomes for farmers. We consider agriculture as an enterprise and want to help farmers produce more from the same land parcel at lesser cost and simultaneously realize higher prices for their produce. Our emphasis is also on generating productive and gainful on-farm and non- farm employment for the farmers and landless families. ” 02-02-2018 SIRC of ICAI 10
SIRC of ICAI Agriculture and Rural economy • Minimum support price (MSP) of at least at 1.5 times the production cost extended to all crops. • Increase institutional credit for agriculture sector to Rs. 11 lakh crore for 2018-19. • Niti Ayog, in consultation with Central and State Governments, to put in place a fool-proof mechanism for farmers to get adequate price for their produce. • To institutionalise appropriate policies and practices for price and demand forecast, use of futures and options market and expansion of warehouse depository system. • To set up Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total corpus of these two new Funds -- Rs. 10,000 crore. • To set up an Agri-Market Infrastructure Fund with a corpus of Rs. 2,000 crore for developing and upgrading agricultural marketing infrastructure in the 22,000 GrAMs and 585 APMCs. 02-02-2018 SIRC of ICAI 11
SIRC of ICAI Agriculture and Rural economy • To promote establishment of specialized agro-processing financial institutions. • Allocation of Ministry of Food Processing doubled from Rs. 715 crore to Rs. 1, 400 crore in 2018-19. • To develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). • To scientifically develop cluster based model for identified agriculture products. • To encourage organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters, preferably of 1,000 hectares each. • To encourage Women Self Help Groups (SHGs) to take up organic agriculture in clusters under National Rural Livelihood Programme. • Allocation of Rs . 500 crore for “Operation Greens”, an initiative to promote FPOs, agri-logistics, processing facilities and professional management. • To liberalise export of agri-commodities. To set up state-of-the-art testing facilities in all the 42 Mega Food Parks. 02-02-2018 SIRC of ICAI 12
SIRC of ICAI Agriculture and Rural economy • To extend the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs. • For creation of livelihood and infrastructure in rural areas, Rs. 14.34 lakh crore to be spent in 2018-19. • To launch a re-structured National Bamboo Mission with an outlay of Rs. 1,290 crore to promote bamboo sector in a holistic manner. • To establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from shortfall of priority sector lending and fully serviced GoI bonds. • “Our emphasis is on generating higher incomes for farmers. We consider agriculture as an enterprise and want to help farmers produce more from the same land parcel at lesser cost and simultaneously realize higher prices for their produce. Our emphasis is also on generating productive and gainful on-farm and non-farm employment for the farmers and landless families. ” 02-02-2018 SIRC of ICAI 13
SIRC of ICAI Agriculture and Rural economy • Has the FM done enough this year to enable the farmers to double their income in 5 years? • Are these measures comprehensive to improve agriculture productivity? • Will the situation in the rural sector improve? • Do these measures address the bottom of the pyramid? • Are any other measures required to improve the rural sector? 02-02-2018 SIRC of ICAI 14
Video 3 • Social Security and protection programme • FM Speech – Para 46 • “My Government’s goal is to assist and provide opportunity to every Indian to realize her full potential capable of achieving her economic and social dreams. Our Government is implementing a comprehensive social security and protection programme to reach every household of old, widows, orphaned children, divyaang and deprived as per the Socio- Economic Caste Census. Allocation on National Social Assistance Programme this year has been kept at Rs. 9, 975 crore. ” 02-02-2018 SIRC of ICAI 15
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