The Reserve Bank of India today released the April 2018 issue of its monthly Bulletin. The Bulletin includes First Bi-monthly Monetary Policy Statement for the Year 2018-19, Monetary Policy Report - April 2018, a speech by the Top management, two Articles, Press release of working papers and DRG Study, and Current Statistics.

The articles are on ‘Union Budget 2018-19: An Assessment’ and ‘Census on Foreign Liabilities and Assets of Indian Direct Investment Companies: 2016-17’.

1. Union Budget 2018-19: An Assessment

This article analyses the key features of the Union Budget 2018-19 bringing out some of the observable as well as underlying trends along with the implications going forward.

Major Highlights:

• In 2017-18, there is a slippage of 0.3 per cent in the revised estimates from the budgeted gross fiscal deficit of 3.2 per cent of GDP.

• The gross fiscal deficit (GFD) and revenue deficit (RD) are budgeted to decline by 0.2 and 0.4 percentage point to 3.3 per cent and 2.2 per cent of GDP, respectively, in 2018-19. In a deviation from the amended FRBM path, the achievement of the GFD-GDP target of 3.0 per cent, however, has now been deferred to 2020-21.

• Fiscal slippage in 2017-18 coupled with postponement of medium term adjustment path has broader macro-financial implications including on economy-wide costs of borrowing.

• On the receipts side, the gross tax revenue is estimated to grow at a robust 16.7 per cent to 12.1 per cent of GDP in 2018-19 (BE). Having exceeded the target for disinvestment in 2017-18 (RE), the target for 2018-19 has been budgeted at ₹ 800 billion.

• On the expenditure side, revenue expenditure is budgeted to grow at a higher rate than capital expenditure, resulting in a revenue-capital ratio of 7:1 in 2018-19 (BE) as against 6:1 in 2016-17.

• Overall, the Budget focuses on the rural economy and agriculture, the social sector (education, health and social protection), senior citizens, infrastructure and the financial sector. The push towards digitisation, delivery of Aadhaar-enabled public services and the focus on employment will make the revival of growth inclusive and equitable.

2. Census on Foreign Liabilities and Assets of Indian Direct Investment Companies: 2016-17

The article provides information on overseas liabilities and assets of Indian companies, arising on account of foreign direct investment (FDI) in India, their overseas direct investment (ODI) and other investments. The 2016-17 round of the census covered 18,667 companies, of which 17,020 companies had FDI /ODI in their balance sheet in March 2017.

Major highlights:

• An overwhelming majority of the responding companies were unlisted who had higher share of FDI equity capital vis-à-vis listed companies in March 2017.

• The manufacturing sector accounted for nearly half of the total FDI at market prices; ‘information and communication services’ and ‘financial and insurance activities’ were the other major sectors that attracted FDI.

• India stock of inward direct investment was nearly four times its outward direct investment at market value.

• Equity valuation gains, though varying across economic sectors, have been sizeable.

• Both Indian and foreign cross-border subsidiaries maintained strong cross-border trade linkages and recorded good business growth during 2016-17.

• Information and communication continued to be the largest export-oriented sector among foreign subsidiaries in India.

The detailed data relating to this Census were earlier released on the RBI website vide Press release No. 2017-2018/1981 on January 19, 2018.

Jose J. Kattoor
Chief General Manager

Press Release : 2017-2018/2689