Union Budget 2017-2018 Review: Yes Securities 

Government projects fiscal deficit target of 3.2%, in line with market consensus. FY18 Revenue deficit pegged at 1.9%, below FRBM mandated level of 2.0%. Focus of the Budget on Investment and Consumption revival Yes Securities (more) Government projects fiscal deficit target of 3.2%, in line with market consensus• Promises to remain committed to 3.0% FRBM target in FY19 FY18 Revenue deficit pegged at 1.9%, below FRBM mandated level of 2.0% Focus of the Budget on Investment and Consumption revival Realistic growth assumption of Gross tax revenues at 12.2%, lower than FY17 growth of 17% that was driven by additional revenue measures FY18 nominal GDP growth pegged at 11.8%, tad lower vs. advance estimate of 11.9% On direct taxes, key change of reduced personal income tax from 10% to 5% for income between Rs 0.25-0.50 mn.

 In addition, corporate tax rate for MSMEs with turnover up to Rs 500 mn reduced to 25% No key change on indirect tax front Tax receipts to be supplemented by Dividends & Profits (Rs 1424 bn) & disinvestment proceeds incl strategic sale (Rs 725bn) in FY18 • FY18 Non tax revenues assume no fresh spectrum auction On the expenditure side, total spending budgeted to rise by 6.6% lower than FY17 RE growth of 13.6% A faster growth in capital expenditure to improve ‘Quality of spending’ marginallyGross and net market borrowing budgeted at INR 6.05 tn and INR 4.23 tn respectively 

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