Agriculture: As a step towards doubling of Farmer income, MSPs for all unannounced Kharif crops will be 1.5x production cost.

For Private Circulation Only Health: World s largest government funded healthcare program through a coverage upto Rs 5 lakh per family per year for secondary and tertiary care hospitalization. Infrastructure: Budgetary and extra budgetary expenditure on infrastructure for 2018-19 up +21% at 3.2% (+20bps) of nominal GDP. Transportation: Airport capacity to be augmented more than five times to handle a billion trips a year. All railway stations with +25K footfalls will sport escalators. Agriculture: As a step towards doubling of Farmer income, MSPs for all unannounced Kharif crops will be 1.5x production cost. Banking & Finance: Moves to deepen bond market through easing eligibility norms for investors and nudging corporates to meet about one-fourth of their financing needs from the bond market. Education: Under Revitalizing Infrastructure and Systems in Education (RISE) by 2022, the government move gradually from black board to digital board

Executive Summary: After a challenging year that saw economy battle the teething problems of GST and rising crude oil prices one would have hoped the FM would recce the industrial & business backyards to offer a healing touch onto tax-weary sectors of the economy. However, far from donning battle fatigues, the FM slithered into a pro-poor budget attire in his last (of the current government) budget. This attire, admirably though, portrays that the focus of the government next year will be on providing maximum livelihood opportunities in the rural areas. These opportunities will be created through 321 crore person days employment, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets and 1.75 crore new household electric connections. Livelihoods will also come from the commitment to doubling farmer s income by raising MSPs to 1.5x cost of production. That is enough solace for the rural economy to look up next year. One can either spend one s way to a shining economy or invest one s way to support industrial and business climate to a strong economy. The former is what the FM has chosen. Fixing of the developmental gaps in the rural economy has been at the cost of deviating from the glide path of fiscal prudence by recalibrating the FRBM Act such that the deficit (GFD) is pegged at 3.5% for FY17-18 as against 3.2% envisaged in the BE (last year budget). The FY18-19 is consequently projected at 3.3%. To finance this deficit, upto 62.5% of GFD, the government intends to borrow Rs 3.9 lakh crore down from Rs 4.02 lakh crore. The revenue raising measures adopted to meet the above objectives has been a bit disappointing, in our view, as the government has raised the tax to GDP ratio from FY17-18 s 11.7% to FY18-19 s 12.2%, a full 0.5 percentage points at a time when voluntary compliance to tax measures has been on the rise. The compliance is also an after-effect of demonitisation-cum-gst as pointed by the eco survey that assessed 18 lakh additional taxpayers over the trendline. Moreover, the revenue raising measures have come through a new LTCG (Long Term Capital Gains) tax of 10% on equities and units that contribute to 11bps (Rs 20000 crore) of the increase in the tax to GDP ratio. Grandfathered capital gains is a but a sweetener on the LTCG tax of 10%. The budget in our view is indeed growth oriented as spending one s way out of distress (rural economy distress heralded by a two-year drought and compounded by demonetization shock) is a well treaded path. However, the resources needed to do so have been at the cost of capital markets that were admirably contributing to the financialisation of savings. That this momentum has been disturbed is unquestionable now. The only question that remains to be answered is where will all the savings move? Our bet is that stock markets will now narrow down to opportunities in just a few quality stocks as investors take advantage of the grandfathered gains to wriggle their way out of others. Fiscal Deficit Estimate 3.3% of GDP Provision for Rural Rs 14.34 L crore LTCG of 10% on equity beyond Rs 1 L is introduced 2

Budget at a glance: Particulars (In Rs crore) 2016-17 2017-18 2017-18 2018-19 Actual Budget Estimates Revised Estimates Budget Estimates 1 Revenue Receipts 1,374,203 1,515,771 1,505,428 1,725,738 Growth 9.5% 14.6% 2 Tax Revenue (Net to Centre) 1,101,372 1,227,014 1,269,454 1,480,649 3 Non-Tax Revenue 272,831 288,757 235,974 245,089 4 Capital Receipts* 600,991 630,964 712,322 716,475 Growth 18.5% 0.6% 5 Recoveries of Loans 17,630 11,933 17,473 12,199 6 Other Receipts 47,743 72,500 100,000 80,000 7 Borrowings and Other Liabilities** 535,618 546,531 594,849 624,276 8 Total Receipts (1+4) 1,975,194 2,146,735 2,217,750 2,442,213 9 Total Expenditure (10+13) 1,975,194 2,146,735 2,217,750 2,442,213 Growth 12.3% 10.1% 10 On Revenue Account of which 1,690,584 1,836,934 1,944,305 2,141,772 11 Interest Payments 480,714 523,078 530,843 575,795 12 Grants in Aid for creation of capital assets 165,733 195,350 189,245 195,345 13 On Capital Account 284,610 309,801 273,445 300,441 14 Revenue Deficit (10-1) 316,381 321,163 438,877 416,034 (-2.1) (-1.9) (-2.6) (-2.2) 15 Effective Revenue Deficit (14-12) 150,648 125,813 249,632 220,689 (-1.0) (-0.7) (-1.5) (-1.2) 22 Fiscal Deficit [9-(1+5+6)] 535,618 546,531 594,849 624,276 (-3.5) (-3.2) (-3.5) (-3.3) 23 Primary Deficit (16-11) 54,904 23,453 64,006 48,481 * Excluding receipts under Market Stabilisation Scheme ** Includes drawdown of Cash Balance (-0.4) (-0.1) (-0.4) (-0.3) Notes: (i) GDP for BE 2018-2019 has been projected at Rs. 1,85,40,220 crore assuming 11.5% growth over the absolete values of GDP at market prices of 2017-2018 (Rs. 1,66,28,000 crore) (ii) Individual items in this document may not sum up to the totals due to rounding off (iii) Figures in parenthesis are as a percentage of GDP 3

Key Budget Highlights: The Finance Minister has focused on ten distinct themes in the Budget 2017-18. Farmers: Target for agricultural credit in 2018-19 at Rs 11 lakh crore. MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops. An Agri-Market Infrastructure Fund with a corpus of Rs 2,000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22,000 Grameen Agricultural Markets (GrAMs) and 585 APMCs. Two New Funds of Rs 10,000 crore announced for Fisheries and Animal Husbandary sectors. Allocation of Ministry of Food Processing is being doubled from Rs 715 crore in RE 2017-18 to Rs 1,400 crore in BE 2018-19. Construction of rural infrastructure: In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the Ministries will be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore. Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth. Health, Education and Social Protection: The estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs 1.38 lakh crore against estimated expenditure of Rs 1.22 lakh crore in 2017-18. Launched a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization. This will be the world s largest government funded health care programme. He also committed Rs 1200 crore for the National Health Policy, 2017, which with 1.5 lakh Health and Wellness Centres will bring health care system closer to the homes of people. On education front, to step up investments in research and related infrastructure in premier educational institutions, including health institutions, it is propose to launch a major initiative named Revitalising Infrastructure and Systems in Education (RISE) by 2022 with a total investment of Rs 1,00,000 crore in next four years. Allocation on National Social Assistance Programme this year has been kept at Rs 9,975 crore. Medium, Small and Micro Enterprises (MSMEs): The Budget has given a big thrust to Medium, Small and Micro Enterprises (MSMEs) to boost employment and economic growth. A sum of Rs 3,794 crore has been provided for giving credit support, capital and interest subsidy and for innovations. It is proposed to set a target of Rs 3 lakh crore for lending under MUDRA for 2018-19 after having successfully exceeded the targets in all previous years. The Budget proposed an outlay of Rs 7,148 crore for the textile sector in 2018-19 as against Rs 6,000 crore in 2016. Employment Generation: Reiterating that creating job opportunities is at the core of Government policies, Finance Minister cited an independent study as showing that 70 lakh formal jobs will be created this year. To carry forward the momentum created by the measures taken during the last 3 years to boost employment generation, Finance Minister announced that the Government will contribute 12% of the wages of the new employees in the EPF for all the sectors for next three years. He proposed to make amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees' contribution to 8% for first three years of their employment against existing rate of 12% or 10% with no change in employers' contribution. Infrastructure: Government s estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 is being increased to Rs 5.97 lakh crore against estimated expenditure of Rs 4.94 lakh crore in 2017-18. 4

The Government has made an all-time high allocation to rail and road sectors and is committed to further enhance public investment. Under the Bharatmala Pariyojana, about 35,000 kms road construction in Phase-I at an estimated cost of Rs 5,35,000 crore has been approved. Railways Capital Expenditure for the year 2018-19 has been pegged at Rs 1,48,528 crore. A large part of the Capex is devoted to capacity creation. Digital Economy: The Finance Minister said that NITI Aayog will initiate a national program to direct efforts in artificial intelligence. The Budget doubled the allocation on Digital India programme to Rs 3,073 crore in 2018-19. To further Broadband access in villages, the Government proposes to set up five lakh wifi hotspots to provide net connectivity to five crore rural citizens. The Finance Minister allocated Rs 10,000 crore in 2018-19 for creation and augmentation of Telecom infrastructure. Disinvestment: The Finance Minister announced that 2017-18 disinvestment target of Rs 72,500 crore has been exceeded and expected receipts of Rs 1,00,000 crore. He set disinvestment target of Rs 80,000 crore for 2018-19. Three Public Sector Insurance companies- National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd., will be merged into a single insurance entity. Prudent Fiscal Management: The Budget Revised Estimates for expenditure in 2017-18 are Rs 21.57 lakh crore (net of GST compensation transfers to the States) as against the Budget Estimates of Rs 21.47 lakh crore. Continuing Government s path of fiscal reduction and consolidation, the Finance Minister projected a Fiscal Deficit of 3.3% of GDP for the year 2018-19. The Revised Fiscal Deficit estimates for 2017-18 were put at Rs 5.95 lakh crore at 3.5% of GDP. Taxes on Income: The Finance Minister has proposed 100% deduction to companies registered as Farmer Producer Companies with an annual turnover upto Rs 100 crore on profit derived from such activities, for a period of five years from financial year 2018-19. In fulfilment of the promise to reduce the corporate tax rate in a phased manner, he has proposed to extend the reduced rate of 25% currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), also to companies reporting turnover up to Rs 250 crore in Financial Year 2016-17. The Budget proposals also seek to provide relief to salaried tax payers by allowing a Standard Deduction of Rs 40,000 in place of the present exemption allowed for transport allowance and reimbursement of miscellaneous medical expenses. He proposes to increase the cess on personal income tax and corporation tax to 4% from the present 3%. The new cess will be called the Health and Education Cess and is expected to lead to a collection of an estimated additional amount of Rs 11,000 crore. Relief to Senior Citizens: Exemption of interest income on deposits with banks and post offices are proposed to be increased from Rs 10,000 to Rs 50,000. Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D. Increase in deduction limit for medical expenditure for certain critical illness from Rs 60,000 (in case of senior citizens) and from Rs 80,000 (in case of very senior citizens) to Rs 1 lakh for all senior citizens, under section 80DDB. Rationalisation of Long Term Capital Gains (LTCG): The Finance Minister has proposed to tax such Long Term Capital Gains exceeding Rs 1 lakh at the rate of 10 percent, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered. The Finance Minister has also proposed to introduce a tax on distributed income by equity oriented mutual funds at the rate of 10 percent, to provide a level field across growth oriented funds and dividend distributing funds. The proposed change in Capital Gains Tax will bring marginal revenue gain of about Rs 20,000 crore in the first year, in view of grandfathering. 5

Target achieved date of budget stocks of previous year: SR. No. Company Name Recommended Date CMP (Rs.) Target (Rs.) Upside (%) Target Achieved Date Days taken to achieve target 1 Puravankara Ltd 01-02-2017 47 54 14.9 06-02-2017 5 2 Prism Cement Ltd 01-02-2017 96 112 16.7 06-02-2017 5 3 PNB Gilts Ltd* 01-02-2017 56 65 16.1 07-02-2017 6 4 Ujjivan Financial Services Ltd 01-02-2017 392 450 14.8 09-02-2017 8 5 KSB Pumps Ltd 01-02-2017 616 690 12.0 30-03-2017 57 6 BEML Ltd 01-02-2017 1,243 1,392 12.0 06-04-2017 64 7 Ashoka Buildcon Ltd 01-02-2017 192 220 14.6 07-04-2017 65 8 Petronet LNG 01-02-2017 387 433 11.9 12-04-2017 70 9 Amrutanjan Health care Ltd 01-02-2017 605 696 15.0 17-04-2017 75 10 Repco Home Finance Ltd 01-02-2017 672 792 17.9 26-05-2017 114 11 V.S.T. Tillers and Tractors Ltd 01-02-2017 1,925 2,214 15.0 20-06-2017 139 12 Dabur India Ltd 01-02-2017 277 320 15.5 07-08-2017 187 13 Capital Trust Ltd 01-02-2017 476 550 15.5 05-09-2017 216 Average 15 78 * PNB Gilts Ltd. reached Rs. 64.7 on 07-02-2017 which suggests it almost achieved the target of Rs. 65 6

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