10
the end of the year in which completion certificate is received.
• Allocation to Urban Rejuvenation Mission (AMRUT & Smart
Cities Mission) increased from
R
73 bn in FY17BE to
R
90 bn in
FY18.
View:
Overall, the budget was a positive for the sector. Key capex/
investment measures mean that the cement and construction
sectors could be big beneficiaries from the budget. The
announcement on the road sector is positive for the entire
sector, as it will result in a pick-up in the overall demand for
cement which has been dented by demonetisation. For the
cement sector, infrastructure contributes~20%of the demand,
which now stands to benefit with increased allocation.
Moreover, incentives for the real estate sector would also drive
demand further for the cement sector, as housing constitutes
a major portion of the demand. The clean environment cess
on coal, however, was kept unchanged at
R
400/tonne,
which could be a negative in the backdrop of increasing pet
coke prices.
Consumer Goods/Retail/Media
Budget Recommendations
• Total allocation of ~
R
1.87 trillion for rural, agricultural and
allied sectors.
• On track to implement GST during FY18.
• Launch of a scheme for employment creation in the leather and
footwear industries.
• MAT credit is allowed to be carried forward by up to 15 years
from 10 years currently.
• Reduction in rate of taxation for individual assessees with
incomes between
R
0.25 mn to
R
0.5 mn reduced to 5% from
10%.
• Setting up of a Dairy Processing and Infrastructure Development
Fund in NABARD with a corpus of
R
20 bn, which will be
increased to
R
80 bn over the next three years.
• Increase in excise duties on cigarettes by ~6-6.5%.
• Limit of duty free import of eligible items for manufacture of
leather footwear increased from 3% to 5% of FOB value of said
goods exported during the preceding financial year.
• No change in services tax.
• Special additional duty on populated printed circuit boards
(PCBs) used for the manufacture of mobile phones increased
from nil to 2%.
• Basic custom duty of 5% and countervailing duty of 6% on all
parts for manufacture of LED lights or fixtures, including LED
lamps.
View:
The budget has been neutral to marginally positive for the
consumer sector. The government has proposed to increase
the excise duty on tobacco products which was in line with
market expectations. For ITC, based on initial estimates, the
blended increase on cigarettes is likely to be on the lower
side of the range, and hence, it is a positive for the company.
Increased allocation for the rural sector is a positive for
companies like HUL, Dabur and Jyothy Labs, as it would
boost rural consumption. The marginal change in tax slab is
likely to provide higher disposable incomes, which in turn is
likely to boost discretionary spending and thereby companies
dependent on the same like Cox and Kings, Voltas, PVR,
etc. No changes were made in corporate tax which was a
disappointment for the industry. However, as the FM has stated
that the government is on track to implement GST during FY18,
there were no major changes in indirect taxes, which could
have had a major impact of the any of the sectors. In addition,
service tax is likely to be mildly positive for media companies.
Fertilisers and Agrochemicals
Budget Recommendations
• Fertiliser subsidy was at
R
700 bn in FY18, against a similar
R
700 bn in FY17BE.
• The coverage under Fasal Bima Yojana scheme will be
increased from 30% of cropped area in FY17 to 40% in FY18
and 50% in FY19, with allocation of
R
90 bn.
• The coverage of National Agricultural Market (e-NAM) will
be expanded from the current 250 markets to 585 APMCs.
Assistance of up to
R
7.5 mn will be provided to every
e-NAM market for the establishment of cleaning, grading and
packaging facilities.
• Allocation of
R
10 trillion (
R
9 trillion in FY17) towards
agricultural credit in FY18 (a record high).
• To create a dedicated Micro Irrigation Fund in NABARD to
achieve the ‘per drop more crop’ goal, with an initial corpus of
R
50 bn.
• To create new mini labs in Krishi Vigyan Kendras (KVKs) and
ensure 100% coverage of all 648 KVKs in the country for soil
sample testing.
• Allocation of
R
200 bn to Long Term Irrigation Fund, taking the
total corpus of the fund to
R
400 bn.
• To create a Dairy Processing and Infrastructure Development
Fund in NABARD with an initial corpus of
R
20 bn and a
consolidated corpus of
R
80 bn over 3 years.
• Reduced customs duty on imports of liquefied natural gas
from 5% currently to 2.5%, which is one of the major inputs for
fertiliser manufacturers.
• Allocation towards Pradhan Mantri Krishi Sinchai Yojana
increased to
R
74 bn, as against
R
58 bn in FY17BE.
• Total allocation of
R
587 bn towards agricultural and allied
sectors, as against
R
586 bn in FY17BE.
View:
The budget was focused largely on improving the efficiency of
farm productivity and doubling farmers’ incomes. The increase
in coverage under the Fasal Bima Yojana to 40% in FY18 and
further to 50% by FY19 would be beneficial for the overall
sector. Moreover, the 60-day interest waiver announced by
Honorable Prime Minister on 31 December 2016, with respect
T
he
U
nion
B
udget
2017-18
