【1】Indian Budget Contained Limited Proof of Progress for India Inc.
【2】Inside India: Modi’s Budget Tries to Have It Both Ways
【3】Five Quotes to Remember from Arun Jaitley’s Budget Speech
【4】The Numbers: India’s 2015 Budget
FASTEST GROWING： 8.1% to 8.5%
DEFICIT DELAY： 3.9%
RURAL JOBS： 50 billion rupees
ROADS AND POWER PLANTS： 700 billion rupees （=110亿美元，太少。不过只是路和发电厂两项）
The budget included more than $11 billion in new infrastructure spending aimed at upgrading the country’s overloaded roads, railways, ports and power plants.
FIXED FREEBIES： 2.4 trillion rupees
The amount of money India budgeted for subsidies slipped 15% to 2.4 trillion rupees. The decline was mostly a result of lower global oil prices rather than any intention by the government to take politically popular perks away from the populace
BUCKS FOR BOMBS（军费）: 2.47 trillion rupees
10% more than previously
CORPORATE TAXES: 25% (from 30%)
【5】Indian Budget Sparks Wave of Hyped Headlines
【6】India Budget Could Ease Foreign Investor Tax Fears
【7】Modi passes budget test despite lack of reform dazzle
【8】India raises defence budget modestly as it confronts China challenge
【12】印度2015-16年财政预算案亮点： 新财年印度GDP增长率预计达8 – 8.5%
【21】 印度 2014-15 年财政预算案
Modi’s Mediocre Budget
India’s new prime minister settles for incremental reform
Narendra Modi delivered on several reform promises in his new budget on Saturday, which should help the economy and earn business support. But the Indian Prime Minister failed to tackle entitlement spending and other barriers to growth, a dodge that will cost him and the country over the next few years.
First the good news. The top marginal tax rate on corporate profits will be reduced to 25% from 30% over four years while trimming deductions. Public investment in roads and railways will increase. Obtaining permits to start a business will be streamlined, along with bankruptcy proceedings. A few restrictions on foreign investment were relaxed.
But the budget also brought disappointment. Some business taxes are set to increase. A national goods-and-services tax is supposed to replace India’s balkanized local taxes in a revenue-neutral way to help build a national commercial market. But the rate is likely to be above 20%, and we have yet to meet the government that resists the lure of raising consumption taxes over time.
Badly needed reforms governing land acquisition and firing workers were left unmentioned, and subsidies on food, fertilizer and fuel were left untouched. A make-work rural-employment scheme started by the Congress Party in 2005 was even enlarged.
These failures are especially unfortunate as Mr. Modi had criticized Congress’s inefficient programs that tried to curry favor with the poor. The victory of a populist upstart in the Delhi state election last month may have convinced Mr. Modi to go slow. The silver lining is that the government plans to pay more of the benefits from these programs directly in cash, reducing the corruption and inefficiency of the current system.
Last year Mr. Modi started a program to encourage the rural poor to open bank accounts. Now he plans to help them buy insurance and set up pensions. Done right, these initiatives could lay the foundation for upward mobility. Done wrong, they could become more expensive handouts that don’t help the intended beneficiaries.
To judge by Saturday’s budget, there’s reason to be skeptical. India needs a reformer in the mold of Margaret Thatcher, not a tinkerer like former Prime Minister Manmohan Singh. Incrementalism betrays the hopes of hundreds of millions of Indians who elected Mr. Modi last year on a platform of sweeping change.
India’s Missed Opportunity
Narendra Modi’s budget didn’t go nearly as far as many had hoped
By Sadanand Dhume
Will Narendra Modi sweep away the cobwebs of socialism that have long held back India and replace them with a market-oriented approach to the economy? Going by his government’s first full budget, presented to Parliament Saturday by Finance Minister Arun Jaitley, one thing is certain: Those who hoped for a sharp and unapologetic departure from the past were too optimistic.
The $288 billion budget is the clearest indication yet of the Modi government’s approach to economic reform. It suggests a leader determined not to be painted as “anti-poor” by his political rivals, even as he seeks to revive investor interest in Asia’s third-largest economy. If Mr. Modi’s landslide election last year was an earthquake, Saturday’s budget was at best a mild tremor.
This doesn’t mean the budget contains nothing to commend it. Mr. Jaitley struck a balance between boosting infrastructure spending (by $11.4 billion) and maintaining a credible roadmap toward fiscal discipline. Separately, the railway minister pledged to spend $137 billion over five years on rail modernization. The government expects to meet this year’s fiscal-deficit target of 4.1% of gross domestic product and bring this down to 3% by 2018. Proposed inflation targeting will add clarity of purpose to the central bank.
Companies will welcome tax cuts that begin to kick in next year, and a rationalization of foreign-investment norms that ends an artificial distinction between direct and portfolio investment. A long-awaited goods-and-services tax promised for 2016 will knit India into a single national market by replacing a patchwork of levies. An expanded visa-on-arrival scheme ought to boost India’s relatively small tourism industry.
Yet the budget contains virtually nothing that requires political courage to accomplish.
Massive food and fertilizer subsidies remain untouched. It remains unclear whether the government will pursue genuine privatization of state-owned firms as opposed to the current practice of selling minority stakes, often to other state-owned firms. Mr. Jaitley even found a way to increase funding for the previous government’s flagship entitlement program, an inefficient and corruption-riddled rural-jobs scheme. The Modi government also announced its own welfarist measures, including a rudimentary social-security program and accident insurance.
For skeptics, all this proves the difficulty of making tough economic decisions in a poor democracy conditioned by decades of leftist rhetoric. India’s economy may well perform better than in the recent past—the government says GDP will expand by more than 8% next year, boosted in part by a new statistical approach—but without deeper reforms the dream of catching up to China or the more prosperous countries of Southeast Asia will remain distant.
The government itself acknowledges that it won’t pursue “big bang” reforms. In its annual economic survey, released a day before the budget, it made the case for “persistent, encompassing and creative incrementalism,” a wordy way of saying that many small steps can add up to big strides.
For instance, over the course of its term, the government hopes to use cash transfers to improve subsidy targeting. In the meantime, instead of a frontal assault on India’s socialist-era labor laws, Mr. Modi has backed states ruled by his Bharatiya Janata Party, such as Rajasthan, that show a greater appetite for political risk. Mr. Modi’s approach to federalism includes transferring more tax receipts from New Delhi to the states, and approving state-government reforms in areas such as labor, for which they share jurisdiction with the center.
If the government wins its showdown with Parliament, an amended land-acquisition law will ease a major impediment to investment in new factories and rural infrastructure. And though nobody expects Mr. Modi to soon achieve his goal of making India one of the world’s 50 easiest countries in which to do business—it is currently ranked 142, according to the World Bank—appreciable progress would do much to win back investor confidence.
But the danger of a “creative incrementalism” is that it can easily become an excuse for timidity and inaction. For now, many foreign and domestic investors will give Mr. Modi’s government the benefit of the doubt. After years of drift under the Congress Party and the ineffectual Manmohan Singh, India’s government now exudes purpose and urgency. Messrs. Modi and Jaitley have offered full-throated support for private enterprise, a marked contrast to rivals such as the Congress Party’s Rahul Gandhi, who frames politics in terms of a divide between the rich and the poor.
Still, Mr. Modi’s government missed an opportunity Saturday to make a decisive statement about its intentions. Investors already leaning toward India will likely view the budget positively. But those hoping that Mr. Modi would be India’s version of Margaret Thatcher or Ronald Reagan—a conviction politician who breaks convincingly with the past—need to give those dreams a quiet burial.
Mr. Dhume is a resident fellow at the American Enterprise Institute and a columnist for WSJ.com. He is writing a book on Indian conservatism.
India Inc. Is Still Ailing as Modi Nears One-Year Anniversary
India enters earnings season with analysts projecting companies’ profit growth to be lowest in five years
MUMBAI—It has been close to one year since Narendra Modi became India’s prime minister and companies here are still waiting for the so-called “Modi magic” to boost their bottom lines.
As India entered its earnings season Thursday with the results of outsourcer Tata Consultancy Services EQTCS -1.43 , analysts are projecting profit growth for the financial year just ended to be the lowest in five years.
While the benchmark S&P BSE Sensex has risen 17% since Mr. Modi was elected on hopes he would become the most business-friendly prime minister the subcontinent has ever known, profit growth has been surprisingly stagnant. Despite widespread optimism about the future of India’s economy, demand growth and infrastructure spending on the ground haven’t been as strong as many analysts and investors had hoped.
Kotak Institutional Equities, an Indian brokerage, projects profit growth of less than 3% for the 30 companies in the Sensex for the year ended March 31. If its predictions come true that would make it the worst year since the one ended March 2010.
Companies in the cement, manufacturing and construction industries are having the toughest time and many companies in those sectors will be reporting losses for the quarter ended March 31, analysts said.
The Indian stock market has gotten ahead of earnings, said Ritesh Jain, chief investment officer at Tata Asset Management Ltd., which manages $4.5 billion.
“The [sales] growth is not there at all,” and it may not turn up for another six months he said. “You could have some correction in the market.”
Some of the biggest backers of the Modi rally since last year—foreign investors—may become less enthusiastic about the India market, analysts said, as they wait for clarification on India’s tax laws. Portfolio investors have recently been slapped with demands for back taxes as India seems to be changing the way it is taxing international investors without warning.
Tax authorities have recently started asking portfolio investors to start paying what is called the minimum alternate tax. Investors had thought the tax didn’t apply to them but now tax authorities plan to apply it retroactively. In a televised interview to an Indian news channel earlier this week, Finance Minister Arun Jaitley said that plans were in place to get around 400 billion rupees ($6.5 billion) from these taxes.
“This demand is not justified,” said Manoj Purohit, partner at Indian accounting firm Walker Chandiok & Co.
Investors and executives say that even though they are optimistic about the government’s longer-term vision, they wish more had been done in the past year.
“When you have made big promises you have to take some big action,” said Harsh Mariwala, chairman of consumer goods maker Marico Ltd. “More aggressive, bolder reforms I would have expected” by now, he said.
While India has recently dethroned China as the fastest expanding big economy in the world—thanks largely to some radical revisions in the way the South Asian nation calculates gross domestic product—companies say they aren’t seeing this surge in growth on the ground.
Among the worst off are the companies in the cement and infrastructure sectors, as demand for their products hasn’t picked up, analysts and executives say. Construction activity and capital expenditure on infrastructure are almost at a standstill as companies are still struggling with debt and sliding tax revenue is weighing on the government’s ability to build the roads, ports and bridges the country needs.
With most earnings and some foreign interest cooling in India, some analysts have trimmed their expectations for Sensex levels. Indian broker Ambit Capital cut its target for Sensex growth for the end of this fiscal year by 5% to 34000 points. Macquarie Capital Securities India (Pvt) Ltd. has cut its target for growth in the CNX Nifty index—India’s other benchmark—by 3.5% to 9600 by the end of this year.
“There seems to be growing restlessness around the timing of policy execution and earnings delivery,” Macquarie said in a recent research note.
Many investors with a long-term view of the Indian market say they are still optimistic and willing to wait for the effects of Mr. Modi’s policies to trickle down to the broader economy. His government has already taken steps to make it easier to do business and has cleared key bills on coal-mining auctions and more foreign investment in insurance.
Ajay Argal, Hong Kong based head of Indian equities at Baring Asset Management Ltd., says he is still positive on Indian stocks as he predicts that profits will rebound over the next two years. Even though the big-bang reforms have yet to happen, Mr. Argal said Mr. Modi is taking a lot of smart small steps to improve the way India’s economy is managed.
“All these things put together, they are quite encouraging,” said Mr. Argal.