12 February 2018 | By Siddhartha Thyagarajan Insight

India's Union Budget 2018-2019

In what was a populist budget in an election year, businesses could still take positives from some of its measures

Budget day in India is always a significant one, as government, trade organisations, media, political parties busily navigate through the fine print of the Finance Minister’s speech, and the interpretations, before voicing their own opinions. And this year, the CBI’s International Director Benjamin Digby was in Delhi on 1 February to witness it.

Although the past four years has seen budgets bring in structural reforms to the Indian economy – opening up more sectors to FDI, and offering tax holidays for start-ups and tax relief for SMEs – this was the last budget before elections.  As a result, Finance Minister Arun Jaitley took the opportunity to sweeten the lives of the poor and the marginalised through a push to healthcare and the farm sector.

These were some of the highlights:


The budget announced the launch of a flagship national health protection scheme. The programme, which some analysts now call “ModiCare”, plans to cover 100 million poor and vulnerable families. This would imply coverage for around 500 million beneficiaries, who will get INR 500,000 per family per year. The scheme will be the world's largest state-funded healthcare programme.


The budget increased the outlay for defence by 7.81 per cent from the previous year. The increased outlay will be supplemented by a Defence Industrial Policy, which is to be announced soon. In addition, the government announced that it would build two defence industrial production corridors in India.

Infrastructure, Aviation, and Airports

The 2018-2019 budget also increased the outlay for infrastructure. There are multiple new greenfield airports in the offing and an aim to increase the number of airports, currently at 124, fivefold.

Bond Market

Finance Minister Arun Jaitley also stated during the budget speech that the Securities and Exchange Board of India (Sebi) will consider a proposal to make it mandatory for large companies to raise about a fourth of their financing needs in the bond market. The scope may extend to smaller companies in due course.

What does this mean for business?

While Ease of Doing business was a key priority for the current government, this budget aims to make life a little easier for the common man, thus taking the focus away from business for the time being.

But, after the budget telecast, CBI members gathered for a roundtable discussion and reception hosted by Sherry Madera, Special Adviser for Asia, City of London and organised in partnership with UK India Business Council (UKIBC). The CBI in collaboration with the UKIBC had reached out to members late last year and compiled a set of recommendations which was submitted to the Union Finance Ministry in January 2018.

Participants agreed that, despite the populist focus, some of the announcements bode well for business. The intent to deepen the bond market to build it as an alternate source for corporate funding will reduce the pressure on banks – currently the primary source of funding for corporates – at a time when the system is in crisis over non-performing assets. This will help corporates diversify their risk further.

Increased outlays to healthcare, defence, infrastructure development, and aviation, present an excellent opportunity for companies in these sectors.

During his visit, Digby also met member companies, key Indian government officials and trade bodies such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI) to further bolster the business relationship, between the UK and India.

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