New Delhi : In Budget 2018-19, the government has pegged fiscal deficit at 3.3 per cent of GDP for the fiscal year starting April 1, 2018. This is higher than the 3 per cent as projected earlier in the fiscal consolidation roadmap. A Reuters poll showed most economists expected a 3.2 per cent deficit in 2018-19, as the government looks to increase investments in areas such as agriculture. For FY18, the government estimated fiscal deficit of 3.5 per cent, higher than the 3.2 per cent projected by Budget 2017. There has been a shortfall in non-tax revenues due to deferment of spectrum auction, the finance minister said.

Markets were spooked by the higher -than-estimated fiscal deficit target, leading to Sensex falling 100 points.

Earlier this week, investors spooked this week after India’s Chief Economic Advisor Arvind Subramanian, in an economic survey ahead of the budget, suggested “a pause” in the fiscal consolidation path, while the government attempts to reinvigorate growth.

Finance Minister Arun Jaitley in his Budget 2018-19 speech exuded confidence that the economy in on the path of over 8 per cent growth rate. The finance minister said that 6.3 per cent growth clocked in the second quarter signalled the turnaround in economy. The growth in the second half of this fiscal (October-March) is expected to accelerate to between 7.2 per cent and 7.5 per cent, he added.

The finance minister also said that manufacturing is back on the growth path and recapitalised state banks will also be able to support growth.

In his Budget speech, the finance minister said that the government is focused on infrastructure creation, higher farmers’ income and economic reforms. The indirect tax regime has been made simpler by the introduction of GST, he added. The structural growth initiative announced by the government will help the government to accelerate in the future, the minister said.

He also said that economy under the first three years of the NDA rule clocked growth of 7.5 per cent.

Farmers

Farmers have been protesting across the country. This budget promises to raise the minimum price offered to farmers for crops, while investing heavily in agricultural markets across India. It also delivers more money for rural areas, including irrigation projects and aquaculture projects, and directs state governments to purchase extra solar power generated by farmers using solar-powered pumps. Agriculture-focused companies such as Shakti Pumps India Ltd., Jain Irrigation Systems Ltd., KSB Pumps Ltd., Kirloskar Brothers Ltd., Avanti Feeds Ltd., Waterbase Ltd., JK Agri Genetics Ltd., PI Industries Ltd. could benefit.

Health Care Providers

The government’s new flagship National Health Protection Scheme, which aims to insure as much as 500 million people for up to 500,000 rupees a year of care, could benefit companies such as Apollo Hospitals Enterprise Ltd., India’s largest hospital company, as well as Fortis Healthcare Ltd.

Transport Companies

With Jaitley promising record infrastructure spending on roads and railways, construction and engineering firms, as well as train wagon-producers, could benefit. That includes Larsen & Toubro Ltd., Hindustan Construction Co Ltd., NCC Ltd., IRB Infrastructure Developers Ltd., Dilip Buildcon Ltd., Titagarh Wagons Ltd., and Cimmco Ltd.

Consumer Companies

With boosted spending on India’s vast hinterland, fast-moving consumer goods companies such as Hindustan Unilever Ltd., Britannia Industries Ltd. and Marico Ltd. could benefit as day laborers get jobs and disposable income. Other companies with rural exposure include: Hero MotoCorp Ltd., Mahindra & Mahindra Ltd., Larsen & Toubro Ltd.

Jewelers

With 60 percent of gold demand coming from rural India, the budget’s focus on boosting rural and farm incomes could benefit companies such as Titan Co Ltd., Tribhovandas Bhimji Zaveri Ltd., PC Jeweller Ltd.

Airports

With the government pledging to expand regional airport construction, firms such as GMR Infrastructure Ltd. and GVK Power & Infrastructure Ltd. could benefit.

Apple, Samsung

In order to boost domestic manufacturing, Jaitley’s budget lifts customs duty on mobile phones to 20 percent from 15 percent. That might lower returns for Apple Inc. and Samsung Electronics as they seek profits in one of the world’s fastest-growing mobile phone markets — or force them to pay out to set up local factories.

Bond Investors

Bond investors drew some relief from a lower than expected borrowing program. Nevertheless, the relief could prove short-lived. India missed its fiscal deficit target of 3.2 percent, saying its targeting a 3.5 percent target for fiscal 2019. Big bond investors such as India’s state-owned banks could be hit as yields go even higher than the the 96 basis points they climbed in the past six months, the most in Asia. Shares of HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., State Bank of India, Bank of Baroda and Punjab National Bank might be affected.

Financial Sector

The government’s decision to impose long-term capital gains tax on equity investments may dent investor sentiment for financial services companies, life insurers and providers of mutual fund products including IDFC Ltd., Reliance Capital Ltd., Aditya Birla Capital Ltd., ICICI Prudential Life Insurance Co Ltd., HDFC Standard Life Insurance Co Ltd., General Insurance Corp of India.

Defense Sector

Jaitley praised the armed forces and promised an industry-friendly policy to promote defense production as he addressed parliament. But there was no indication of a huge boost to defense spending. Companies such as Bharat Forge Ltd. may not see a boost.

To help pay for its ambitious health plans, which are meant to benefit millions of poor Indians, the government has increased an existing health and education levy to 4 percent from 3 percent. That applies to all products and services — and will make almost everything slightly more expensive.