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MOSL: Morning India (2/February/18): 1. Union Budget 2018-2019; 2. Power Grid Corpn; 3. Bajaj Finance; 4. Titan; 5. Hindalco-Novellis

MOrning India (2/February/18): 1. Union Budget 2018-2019; 2. Power Grid Corpn; 3. Bajaj Finance; 4. Titan; 5. Hindalco-Novellis; 6. Ashok Leyland; 7. Cummins India; 8. Quess Corp; 9 CEAT; 10 Equitas Holdings; 11. Telecom; 12. Automobiles

 

Today’s top research theme

Union Budget 2018-2019: Shades of populism ahead of election year; Yet, no evidence of profligacy

• The government did not succumb to demands for free cash incentives, farm loan waivers or universal basic income. It remains to be seen if the announcement to keep MSPs for kharif crops at least at 1.5x of their production cost will lead to a significant growth in MSPs and/or thus higher inflation in 2018-19.
• The fiscal deficit target of 3.3% of GDP for FY19 is broadly in line with the consensus, while market borrowing targets are better-than-consensus. Details, however, are not as favorable.
• There are at least three reasons why 2018-19 Union Budget numbers could see significant revisions. Firstly, an expected growth of 19.1% in indirect taxes implies a sharp jump in buoyancy and ~27% growth in monthly run-rate of GST collections. Both appear ambitious. Secondly, fuel subsidy is unchanged at INR250b, which poses a risk of INR250b-300b slippage. And thirdly, there are no allocations for the flagship National Health Protection Scheme, which could cost as much as INR500b.
• Further, sharp revisions in almost all budget items for FY18 raise doubts over the sanctity of FY19BE numbers. It is also notable that capital spending is budgeted to fall to 1.6% of GDP – the lowest in the past half a century versus 1.8% in FY17.

Piping hot news

GST: E-way bill implementation deferred due to glitches

• The government today deferred implementation of requirement to carry e-permits for inter-state transportation of goods following technical glitches. GST provision requiring transporters to carry an electronic waybill or e-way bill when moving goods between states was to be implemented from today to check rampant tax evasion. “In view of difficulties faced by the trade in generating e-way bill due to initial technological glitches, it has been decided to extend the trial phase for generation of e-way bill, both for inter and intra state movement of goods. It will be applicable from a date to be notified,” the Central Board of Excise and Customs (CBEC) tweeted.