Religare budget special report

Strategy & Economics
INDIA

13 February 2013

Union Budget FY14 Preview
How to get 5.3%/4.8% fisc for FY13/14
We believe and illustrate how the Govt. could meet its fisc targets
of 5.3% for this fiscal, and then a lower, 4.8% for FY14, using a
mix of a tight belt on plan expenditure, and some help from
accounting this fiscal, with some subsidy rationalization in FY14.
Our assessment would be 5.8%/5.2% for FY13/14. REPORT AUTHORS

Tirthankar Patnaik
Lower subsidies are desirable, could be inflationary, and (91-22) 6766 3446
negative for growth and consumption in the near-term, but on the tirthankar.patnaik@religare.com
whole are preferable to a higher-growth-high-fisc scenario. On Prerna Singhvi
these lines, policy-based intervention would be the feasible (91-22) 6766 3413
choice over fiscal pump-priming for the Govt., given its strained prerna.singhvi@religare.com
finances. Saloni Agarwal
(91-22) 6766 3438
Union budgets in India have progressively lost significance for agarwal.saloni@religare.com
the markets in the past few years. Despite being the next macro
trigger for the markets, we think this year may not be very Subsidy burden in FY13
different, other than the sustained equity supply. The budget Actual subsidy
FY13BE FY13E
burden in FY13
recipe is likely to be a sweet-and-sour mix of reform and
Food 818 750 1,000
populism in a pre-election year, with a potential dose of
Fertilizers 988 610 610
regressive policies thrown in.
Oil 1,002 436 700
 Expect to see a 5.3%/4.8% fisc for FY13/14: Meeting the fiscal target Others 105 105 105
is primal for the Govt. this year, and we believe it’s possible for these Total 2,912 1,900 2,414

seemingly optimistic estimates to be met, with subsidy deferrals, % of receipts 31.7% 19.4% 26.5%
% of GDP 2.9% 1.9% 2.4%
thanks to cash accounting, and a tighter plan expenditure being the
Source: RCML Research
likely tools of choice. Our estimates are more sedate at 5.8%/5.2%
Fiscal deficit trend
over this period as we factor in lower tax revenues and lower
(%)
deferrals. 8.0
6.0 6.3
 Potential consequences of a lower fisc: Apart from the obvious 6.0
5.9
5.1
5.8
5.2
4.6
benefits, we believe a lower subsidy-led fisc would be negative for
4.0 3.3
growth and consumption in the near-term, with 5.3%/4.8% over 2.6

FY13/14 leading to a potential -25bps on growth, implying a lower 2.0

FY14 growth estimate to ~5.5% (from 5.8%).
0.0

 For the market: While it remains the next macro trigger, the
sustained PSU equity supply is likely to remain an overhang for the
markets over the next few months, short of a substantial positive
Govt. borrowings vs. incremental deposits –
surprise. A 4.8% fisc for FY14 is structurally positive, save the higher reflects crowding out of private sector
fuel/fertilizer inflation, potentially back to FY12 levels, delaying the Budgeted
(Rstrn) (%)
rate-cut cycle. On the bright side could be steps to channelize long- 6.0
Actual
100%
Actual borrowings/incremental deposits
term capital into investments (details in the note). Markets would look
5.0
at a lower fisc print positively as it improves Govt. finances in the long- 80%

term. Sector-wise impact: Positive – Infrastructure, Energy, Industrials, 4.0
60%
Banks; Negative – Consumer, Autos, Real Estate; Neutral – IT, 3.0
Telecom, Healthcare, Metals. 40%
2.0

20%
1.0

0.0 0%
FY03 FY05 FY07 FY09 FY11 FY13
Source: Bloomberg, RCML Research
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Union Budget FY14 Preview Strategy & Economics
INDIA

A fight for fiscal consolidation
Would the Govt. get the fisc to 5.3% in FY13 and 4.8% in FY14?
If this year’s Union Budget has something that’s different from the dozen before it, it’s Meeting the fiscal deficit target is key
the inordinate amount of attention given to the fiscal deficit figure. The finance minister for the budget this year, as is the fiscal
has gone all out promising that the fisc for this year would be capped at 5.3%--marginally trajectory going forward
higher than the budget estimate of 5.1%--come what may. Further, the fiscal roadmap
proposed by the Govt. in October’12 also proposes a phased reduction in the fiscal deficit
by 60bps each year till FY17, by which time it would have reached 3% of GDP, within
FRBM guidelines.
Can the finance minister pull this off? Could we really expect a secular downtrend in the Historical evidence is supportive of
fisc over the next five years? Before we delve into the details, let’s examine the historical meeting fiscal deficit targets…
evidence. As the chart below shows, budgeted fisc estimates have mixed chances of
being met. Until the GFC hit us in FY09, budgeted fiscal deficit figures were largely likely
to be met. Actual deficits have been higher about 4/10 times since FY02. It’s when the
UPA-II Govt.’s domestic mismanagement coalesced with a global slowdown, leading to a
sharp drop in growth, that fiscal management became difficult, and conversely relevant,
in terms of getting the economy back on track.
Fig 1 - Fiscal deficit trend
(%)
Budget Estimate Actual
8.0
6.8
7.0 6.7
6.1 5.9 6.0 5.9
6.0 5.6 5.5
5.3 5.1
4.7 4.8 4.9
5.0 4.4 4.6
4.3
4.0 4.1 3.8
4.0 3.5 3.3
3.1
3.0 2.5

2.0

1.0

0.0
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13BE
Source: India Budget, RCML Research

So why the skepticism this time towards meeting the targeted figures? In a word, …but the macro slowdown has
“Growth”. With GDP growth dipping ~250bps between FY11 and FY12, falling tax muddied the waters a bit
revenues (and stubborn subsidies) have inflated the fisc, leading to the sharp miss from
the budget estimates (5.9% vs. 4.6% in FY12). Macro environment in the new fiscal is
unlikely to be very different, if a little better than what we have now, with 5.5-6% growth
remaining an overhang on revenues, and pre-election year one on expenditure. In other
words, conventional logic would point to a significant fisc in FY14 as well.

Now for the details. We believe a downward fiscal trajectory is not an unthinkable
scenario, and the Govt.’s figures for the fisc can be met over the medium term, with
prudent policy-led initiatives on trimming non-plan expenditure, subsidy rationalization,
and renewing investment focus. In the near-term, however, the Govt. could also employ
use simpler, and more effective ways, like pruning plan expenditure, and deferring
subsidy payments, the latter made possible by the cash (vs. accrual) accounting standards
followed. What this means in simplistic terms is that the Govt. recognizes an accounting

research.religare.com 13 February 2013 Page 2 of 23

INDIA

entry or transaction only when the actual transfer of money takes place, as against taking Yes. The Govt. can meet its fiscal
measure of receivables and payables, as companies usually do. deficit target of 5.3% for FY13, and
could actually also promise and meet
Cash vs. Accrual accounting an FY14 target of sub-5% fisc: 4.8%

Cash accounting considers transactions on actual transfer of money, like a withdrawal, or
a deposit, as against what’s called accrual accounting, which recognizes receivables and
payables, assets and liabilities. Considering income/expenditure over profit/loss, a cash
accounting framework appears to be clean and simple at first hand, but is usually
considered suboptimal given shortcomings like missing obligations like interest/pension
payable, depreciation, and delayed receivables. For the Govt., this translates into tax and
capex volatility, and to some extent an unreal fiscal picture. For instance, a ‘healthy’
scenario of high tax off-take in one period might simply be undone by large-refunds in
the next. Alternatively, subsidy announcements made in one period could actually be
paid in the next quarter or fiscal. Govt. across the World have shifted to accrual
accounting in recent years, and in India, plans to shift were put in place in November
2011 by the GASAB (Government Accounting Standards Advisory Board), appointed by
the CAG, and are expected to take six years to be completed. Till then, the Govt. can
always defer subsidies and hope for a better fiscal next time around.

The Finmin therefore might actually show a fiscal deficit of 5.3% in FY13 and 4.8% in Cash vs. Accrual accounting would be
FY14, by reducing subsidy paid in each period. part of the trick, potentially a
meaningful part
Deferring/reducing subsidy disbursals:
The Govt. could choose to defer subsidies to FY14 (see table 4 for details) and hope to cut
down on subsides then, through sustained Diesel price hikes, urea hike, and with
trimming leakage with Direct Cash Transfers. Not to worry if political compulsions in a
pre-election year limit the extent to which these measures could be undertaken.
Subsidies payments could always be deferred to the next fiscal, cutting down on subsidy
burden in FY14. Let’s see the numbers this year. The actual subsidy burden for FY13 has
reached Rs2.9trn—almost Rs1trn more than the budgeted subsidy figures of Rs1.9trn.

Assuming no further fertilizer subsidy disbursal in FY13 and Rs550bn for oil (disbursed in
9MFY13, Q4 figure to be paid in Q1FY14), the Govt. is expected to release only Rs2.1trn,
thus potentially deferring Rs845bn to FY14. While this would make the FY13 fiscal print
look rosy, it raises concerns on the FY14 finances.

Overall, our scenarios suggest that the Govt. could defer as much as Rs845bn to FY14 Subsidy deferral could be substantial
towards meeting the targeted fisc for this year. And then with a series of positive steps this year, as much as Rs845bn, double
(details in table 5), restrict subsidies in FY14 to just Rs1.3trn, thereby restricting the that of the last fiscal
overall burden to Rs2.2trn, about 1.8% of GDP. The Food Security Bill could be deferred,
or watered down, so that expenses are not front-loaded, Diesel hikes are taken
religiously so as to narrow the under-recovery per litre to zero, LPG, kerosene prices are
raised, as are urea prices.

Of course, we’ve painted a blue-sky scenario, and FY14 could also see deferral of
subsidies to FY15. The point we make is that it’s possible to optically improve the fiscal
indicators of the country, and current politico-economic conditions do not preclude that
possibility.


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Fig 2 - FY13 subsidy – actual burden vs. potential disbursal (to reach 5.3% fisc)
Actual Subsidy Potential subsidy Actual subsidy disbursed Potential amount
Rs bn FY13 BE subsidies
burden in FY13 disbursal in FY13 till now deferred to FY14
Food 750 818 818 443 0
Fertilizers 610 988 594 594 393
Oil 436 1,002 550 550 452
Others 105 104.61 104.61 105 0
Total 1,900 2,912 2,067 1,692 845
% of receipts 19.4% 31.7% 0.2% 0.2% 0.1%
% of GDP 1.9% 2.9% 2.0% 1.7% 0.8%

Fig 3 - FY14 subsidy disbursal to reach 4.8% fisc
Actual subsidy
Rs bn FY13 FY14 Potential Govt. action
incurred in FY14
1) No Food Security Bill, and 2) Firm roll-out plan on Direct Cash Transfer which would
Food 818 725 725
help reduce leakages
1) Steep hike in urea prices or possibly a gradual de-control, and 2) reduction in subsidies
Fertilizers 594 693 300
on complex fertilizers
Best case scenario in the absence of any subsidy deferral to FY15 (though highly
Oil 550 610 158 unrealistic) could be 1) complete diesel de-control (Rs9.9 hike), 2) LPG price hike of
Rs450, 3) Rs3 hike in Kerosene prices
Others 105 150 150
Total 2,067 2,178 1,332
% of receipts 0.2% 20.5%
% of GDP 2.0% 1.8%

Reducing Plan expenditure
The Govt., as also pointed out earlier, could reduce its plan expenditure by 10% at the Reducing Plan Expenditure is another
expense of growth (where expectations are already falling), especially in defence and step towards meeting fiscally tight
outlay on roads. Non-plan expenditure, representing payments, subsidies, etc. is targets
inherently harder to control, given extant political and economic compulsions.


INDIA

Fig 4 - Fiscal deficit math –How the Govt. can achieve 5.3% in FY13 and 4.8% in FY14
FY13 revised to FY14E to
Rsbn FY12 FY13 BE % diff. % yoy % yoy
reach 5.3% reach 4.8%
Central govt. net tax revenue 6,423 7,711 7,322 -5.0% 14.0% 8,566 17.0%
Non-tax revenue 1,247 1,646 1,446 -12.1% 15.9% 1,584 9.5%
Telecom auctions 400 400 200 -50.0% -50.0% - -100.0%
Central govt. revenue receipts 7,670 9,357 8,768 -6.3% 14.3% 10,150 15.8%
Non-debt Capital Receipts 298 417 417 0.0% 40.0% 427 2.5%
Divestment proceeds 155 300 300 0.0% 93.6% 300 0.0%
Total Receipts 7,967 9,773 9,184 -6.0% 15.3% 10,577 15.2%
Non-plan Expenditure 8,921 9,699 9,866 1.7% 10.6% 10,917 10.6%
Of which Capital Expenditure 764 1,043 1,043 0.0% 36.6% 1,172 12.4%
Of which Revenue Expenditure 8,157 8,656 8,823 1.9% 8.2% 9,744 10.4%
Subsidy outgo 2,163 1,900 2,067 8.8% -4.4% 2,178 5.4%
Food 728 750 818 9.1% 12.3% 725 -11.4%
Fertilizers 672 610 594 -2.5% -11.5% 693 16.5%
Oil 685 436 550 26.2% -19.7% 610 10.9%
Others 78 105 105 0.0% 34.2% 150 43.4%
Plan Expenditure 4,266 5,210 4,689 -10.0% 9.9% 5,273 12.4%
Of which Capital Expenditure 804 1,005 905 -10.0% 12.5% 1,034 14.3%
Of which Revenue Expenditure 3,462 4,205 3,785 -10.0% 9.3% 4,239 12.0%
Total Expenditure 13,187 14,909 14,555 -2.4% 10.4% 16,189 11.2%
Nominal GDP 89,749 101,599 101,599 0.0% 13.2% 117,836 16.0%
Fiscal Deficit (5,220) (5,136) (5,371) 4.6% 2.9% (5,613) 4.5%
Fiscal Deficit as % of GDP 5.8% 5.1% 5.3% 4.8%

What do we think? – A more realistic picture
We’ve justified odds of the Govt.’s meeting its target of 5.3% for this fiscal, and
potentially stretching to 4.8% for the next, and its impact on the macro/markets. What
happens if the Govt. does not resort to aggressive payment deferral, or restrict plan
expenditure?

We believe the fiscal calculations then would be fairly different, with the FY13 fisc spiking Our estimates for the fisc trajectory
to 5.8%, missing the Govt. target by a wide margin. And one can be excused for being ovr FY13/14 are higher than Govt.
conservative on reforms in a pre-election year, and with muted expectations of a fiscally estimates at 5.8/5.2% vs. 5.3/4.8%
prudent budget, we would expect the fisc to improve only marginally to 5.2% in FY14 vs.
the Govt.’s potential target of 4.8%.

Our estimates differ from what we believe the Govt. would do, primarily on more sedate
assumptions of lower tax revenue, and a subsidy burden, with lower deferrals. Corporate
tax growth has been lagging budget estimates, expectedly so, and our conservative view
of FY14 growth (5.8% vs. street expectations of 6.5%) translates into weaker growth
figures for income, and corporate taxes.

On subsidies, our estimates do not include the Food Security Bill as of now, given the lack
of clarity on the targeted spend, and the level of front-ending possible as a political
exigency.


INDIA

Fig 5 - Fiscal deficit math – RCML estimates
Rsbn FY12 FY13E % yoy FY14E % yoy
Central govt. net tax revenue 6,423 7,252 12.9% 8,383 15.6%
Non-tax revenue 1,247 1,446 15.9% 1,583 9.5%
Telecom auctions 400 400 0.0% - -100.0%
Central govt. revenue receipts 7,670 8,698 13.4% 9,966 14.6%
Non-debt Capital Receipts 298 417 40.0% 428 2.8%
Divestment proceeds 155 300 93.6% 300 0.0%
Total Receipts 7,967 9,115 14.4% 10,394 14.0%
Non-plan Expenditure 8,921 10,213 14.5% 11,129 9.0%
Of which Capital Expenditure 764 1,043 36.6% 1,172 12.3%
Of which Revenue Expenditure 8,157 9,170 12.4% 9,957 8.6%
Subsidy outgo 2,163 2,414 11.6% 2,450 1.5%
Food 728 1,000 37.3% 1,000 0.0%
Fertilizers 672 610 -9.3% 600 -1.6%
Oil 685 700 2.2% 700 0.0%
Others 78 105 34.2% 150 43.4%
Plan Expenditure 4,266 4,819 13.0% 5,419 12.4%
Of which Capital Expenditure 804 921 14.6% 1,053 14.3%
Of which Revenue Expenditure 3,462 3,898 12.6% 4,366 12.0%
Total Expenditure 13,187 15,033 14.0% 16,548 10.1%
Nominal GDP 89,749 101,599 13.2% 117,836 16.0%
Fiscal Deficit (5,220) (5,918) 13.4% (6,153) 4.0%
Fiscal Deficit as % of GDP 5.8% 5.8% 5.2%

th
Govt.’s fiscal consolidation roadmap for the 12 plan looks overly optimistic
th
In a press statement on October 29 , the Finance Minister unveiled a five-year fiscal The Govt. expects to bring down fiscal
consolidation roadmap for the period FY13-FY17 with an aim to contain India’s twin- deficit to 3% by FY17 – we believe this
deficit problem and high inflation, spur investments and boost economic growth. As per is overly optimistic
the roadmap, India’s fiscal deficit would come down from 5.3% expected in FY13 to 4.8%
in FY14, 4.2% in FY15, 3.6% in FY16 and finally to 3% in FY17.

While supportive of it at a broad, policy level (as we are of the Direct Cash Transfer, and
the Food Security Bill etc.), we find roadmap overly optimistic, especially in the absence
of key recommendations of the Kelkar Committee, such as price increases in food and
fertilizers, sugar de-control, actual (as opposed to announced) price hikes of petroleum
products, and postponement of the food security bill. Recent commentary from the FM
on sticking to the fiscal target, and lowering the fisc steadily (~60bps annually) is a
positive indeed, but now implementation is key.


INDIA

Fig 6 - Fiscal consolidation roadmap during period FY13-17
(%)

6.0
5.3
4.8
5.0
4.2
4.0 3.6
3.0
3.0

2.0

1.0

0.0
FY13 FY14 FY15 FY16 FY17
Source: Ministry of Finance, RCML Research

Fiscal policy roadmap looks
overoptimistic, as do the targets for
the XII Five Year Plan, given the
current growth trajectory
th
Fig 7 - Key economic targets for the 12 Five Year Plan
% Eleventh plan (FY08-12) Twelfth plan (FY13-17)
Economic growth (avg.)
Real GDP 7.9 8.2
Agriculture 3.3 4.0
Mining and Quarrying 3.2 7.2
Manufacturing 6.9 8.0
Electricity, gas & water supply 6.0 7.8
Construction 7.3 8.6
Services 9.8 9.1
Savings, investment & consumption* (avg.)
Investment 37.6 39.3
Consumption 70.0 67.4
Savings** 35.8 37.1
External sector (avg.)
Exports 14.7 18.0
Imports 23.5 26.9
Trade deficit (8.7) (8.9)
Current account balance (CAD) (2.7) (2.9)
Capital account balance (KAD) 4.1 3.2
Fiscal
Tax revenue (net of states' share) as % of GDP 7.60 in FY12 8.79 in FY17
Subsidies as % of GDP 2.44 in FY12 1.20 in FY17
Fiscal deficit (avg.) 5.15 3.98 (to reach 3% by FY17)
Gross budgetary support as % of GDP (avg.) 4.69 5.23
Infra Investments as % of GDP (avg.) 7.10 8.26
Source: Planning Commission, RCML Research


INDIA

Implications on the macro and markets
A lower fisc in India is clearly desirable, as we show below, but we are also worried with Everybody loves a low fisc. but be
the direction and implications of tighter Govt. spending on the overall macro, esp. in the prepared for ‘costlier’ consequences!
near-term. We show that the impact of the Govt. meeting its fiscal targets for FY13/14
could be ~25bps on growth.

Lower fisc is good for economy…

There’s no debate on the benefits of a lower fiscal deficit in the economy, one needs only
to examine the extent of ‘crowding out’ of the private sector over the last few years, as
Govt. spending, and consequently, borrowing has exceeded budgeted targets.
Fig 8 - Crowding out of the Private sector on rising Govt. borrowing Why lower fiscal deficits are desirable
(Rstrn) Budgeted Govt. borrowings Actual Govt. borrowings (%)
6.0 Actual borrowings to incremental deposits ratio 5.7 90%
5.3
5.1 80%
5.0 4.54.5 4.6
4.4 70%
4.2
4.0 60%

50%
3.0 2.7
40%

2.0 1.5 1.6 1.51.5 1.61.7 1.5
30%
1.41.4 1.3
1.21.3
20%
0.8
1.0
10%

0.0 0%
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Recent years have seen the Govt. take up a progressively higher share of the capital on
offer in the market, as the previous chart illustrates, and this phenomenon is accentuated
when actual borrowing exceeds targeted levels. The figure for FY13 at nearly 85% is given
the front-ended borrowing program on one hand, and low deposit growth on the other.

And negative surprises on borrowing have also been exacerbated in recent years with
falling credit growth, as the chart below illustrates.
Fig 9 - Budgeted and actual Govt. market borrowings vs. credit growth Exceeding borrowing targets hurts
(Rstrn) Budgeted Actual Credit growth (%) more in a falling credit growth
6.0 5.7 40.0 environment
5.3
5.1
35.0
5.0 4.54.5 4.6
4.4
4.2 30.0
4.0
25.0

3.0 2.7 20.0

15.0
2.0 1.5 1.6 1.51.5 1.61.7 1.5
1.41.4 1.3
1.21.3 10.0
0.8
1.0
5.0

0.0 0.0
Source: India Budget, RCML Research

A sustained rise in Govt. borrowing also implicates national income growth. In the chart
below we juxtapose this indicator with GDP growth over the last decade, and see that


INDIA

while a rise in Govt. spending was helpful during the GFC period in boosting economic
growth (FY09-10), its sustained rise since then has only served to crowd out the private
sector in the economy, with the consequent negative implications for growth.
Fig 10 - Share of Govt. borrowing in the economy and GDP growth Despite the help from fiscal pump-
(Rstrn) (%) priming during the GFC, rising share of
GDP growth (L) Actual Govt. borrowings to incremental deposits ratio (R)
12% 90% Govt. borrowing is inimical to growth,
80%
very clearly so
10% 9.5% 9.6% 9.3% 9.3%
8.6% 70%
8.1%
8% 60%
7.0% 6.7%
6.2% 50%
6% 5.5% 5.5%
40%
4.0%
4% 30%

20%
2%
10%

0% 0%
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E

The point is made: Relatively speaking, Govt. spending is inferior to private spending for
growth.

… and for the markets
We believe therefore that the markets would cheer a lower fiscal figure for FY14, even as
economic and fiscal performance this year would necessitate subsidy deferral and hence
trust in the final tally for FY13. A low FY14 fisc print, say below 4.8%, would we believe be
viewed positively despite a potential hit on the economic growth as it improves and
brings Govt. finances on track in the long-term.

..and for the central bank
The Reserve Bank of India (RBI) has time and again voiced concerns over high fiscal deficit
and CAD as being key constraints towards an easing monetary policy, besides obviously
high inflation. A fiscally responsible Budget may also mean a more comfortable RBI on
easing rates—another positive for investment in the economy and the markets.

…Expenditure cuts could however hurt in the near-term
Now let’s for a moment examine the near-term consequences. Near-term pain from a sharp cut in
Govt. spending
What we are interested here are in the aftermath of lower Govt. spending on the
economy, and its growth prospects, even if the Govt. is no longer the significant
component of the economy it once was.

A sharp reduction in FY14 subsidies (assuming no deferral) would happen only when the Govt.’s role in the economy has come
Govt. takes sharp fuel and fertilizer (urea) price hikes. While structurally a big positive for off over the last two decades, but
Govt. finances, this also implies higher inflation as a necessary corollary with higher every bit counts in a slowdown
food/fuel/finished goods prices, which in turn would hurt not just consumption in the
near-term (we are worried about urban consumption), but could potentially also extend
the monetary easing on one hand, and a growth revival on the other.

Moreover, a sustained cut in Govt. plan expenditure (esp. defence/infra) in FY13 could
hurt the potential growth trajectory over the next few years, despite near-term fiscal
amelioration. Comparing RCML estimates with the Govt. numbers to achieve the ‘revised’


INDIA

5.3% fisc in FY13, we estimate that the shortfall of Rs477bn in Govt. expenditure could
negatively hurt growth by ~25bps (that too assuming no multiplier effect).
Fig 11 - Impact of lower capex on growth The price to meet the fiscal deficit
Rs bn Capex shortfall in FY13 Govt. vs. RCML est. target for this year and the next could
Non-plan expenditure 347 be 25bps of growth
Capital Expenditure -
Revenue Expenditure 347
Plan Expenditure 130
Capital Expenditure 17
Revenue Expenditure 113
Total 477
% of Nominal GDP 0.5%
GDP Deflator 1.9
Effective change in GDP 0.24%

So what are we saying here? Clearly that given a choice, we would prefer a lower growth
trajectory over a stubbornly high fisc, even if that means near-term pain.

Sector-wise, higher inflation would hit consumption, esp. in the urban segment, and thus Near-term pain on lower fisc would be
by negative for the Consumer sector (both discretionary and staples), i.e., Autos, Media, negative for consumption, esp. in the
Household & Personal Products, Food & Beverages, and residential Real Estate (lower urban segment, with sector
implications
housing demand). The resultant drop in urban consumption could also impact private
banks with significant retail exposures. However, an investment boost would be positive
for Infrastructure, Energy, Industrials and to some extent the Banking space. A lower fisc
print would have a neutral impact on Telecom, Healthcare, IT and Metals.


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What can the Govt. do to help investment?
The central bank’s rate cut in January—we’ve maintained earlier—was more towards Money is not everything, prudent
easing consciences about comfort on the inflation trajectory going forward, rather than decision-making is
any significant change in the cost of funds for the economy. To spur growth, when
inflation and a widening CAD restrict the support one can expect from the RBI, would
take Govt. approvals on one hand, and sustained corporate capex on the other. We
believe the fiscal balances do not allow the Govt. to spend money in this environment, or
lower taxes as in during the GFC (FY0-10) years. The feasible route remains policy-based
intervention that incites a constructive environment for investment, esp. for large-cap
projects.

Fiscal pump-priming for investments almost impossible this time
around...

Let’s face it: Growth is down to 5.5% in FY13E, and a little better in FY14E (we expect Fiscal pump-priming for investments
5.8%). The last time that happened was in FY09, with the fisc at 6% (except that FY10 saw looks difficult given messy state of
8.4% growth. i.e., no meaningful bounce this time around). While the Govt. has been finances
cutting its planned spending at the expense of growth, subsidies and interest payments
Continued push on reforms important
remain high (despite large deferrals) and take up more than 75% of the total tax receipts
to improve sentiments and attract
(as per FY13BE). As such, bold moves such as urea de-regulation/price hikes, sugar de- investments
control, are inevitable towards meaningfully meeting the fiscal prudence targets till FY17.

Corporate investment in the economy has been flat over the last few years, but the Govt.
is no position to take over especially when some social spending would be required
ahead of general elections. The only tool that will not cost the bucks and still help
improve sentiments, attract investments into India and facilitate growth remains the
continued push on reforms.

...given the messy state of public finances in FY13
Corporate, excise and custom taxes have lagged Budget estimates thus far and the gross
tax collection is likely to miss the budgeted target of 20%YoY (15%YoY so far) despite
strong service tax collections (33%YoY so far versus the budgeted 30.5%). While revenue-
collection is often back-ended, a sharp-pick is unlikely in FY13.
Fig 12 - Tax collections growth in FY13
FY13 so far FY13BE
40%
34%
35%
30% 31%
30%
24%
25% 22%
20%
20% 17% 16%
14% 15%
15%
11%
10%
4%
5%

0%
Income Corporate Custom Duties Excise Duties Service Gross Tax
Revenue
Source: RCML Research, CMIE


INDIA

Fig 13 - Tax collections
(Rsbn) FY13BE %YoY FY13E %YoY FY14E %YoY
Direct Taxes 5,690 15.1% 5,621 13.7% 6,375 13.4%
Income Tax 1,958 17.5% 1,983 19.0% 2,301 16.0%
Corporate Tax 3,732 13.9% 3,637 11.0% 4,074 12.0%
Indirect Taxes 5,086 24.9% 4,697 15.3% 5,503 17.2%
Custom Duties 1,867 22.0% 1,607 5.0% 1,735 8.0%
Excise Duties 1,944 29.5% 1,771 18.0% 2,090 18.0%
Service Tax 1,240 30.5% 1,283 35.0% 1,642 28.0%
Source: India Budget, CGA, RCML Research

While we expect the Govt. to meet its divestment target of Rs300bn (Rs216bn already We expect Govt. to meet its
achieved till now), we remain skeptical on the likely outcome of the second round of 2G divestment target of Rs300bn for FY13
auctions (first round generated only Rs94bn vs. target of Rs400-450bn). As such we but miss its target from telecom
auctions of Rs400bn by a wide margin
remain conservative on non-debt capital receipts in FY13.
Fig 14 - Govt. disinvestments in FY13 so far
Company Market cap (Rsbn) Govt. stake Actual stake sale No. of shares Amount (Rsbn)
NTPC 1,221 75.00% 9.50% 8,245 115
NMDC 583 90.00% 10.00% 3,965 59.9
Oil India 322 68.43% 10.00% 601 31.4
Hindustan Copper 115 90.41% 9.59% 925 8.1
National Buildings Construction Co. 18 74.00% 10.00% 120 1.3
Total 216

Subsidy expenditure as a share of total receipts of the government has increased from
~13% in FY01-FY08 to ~26% in FY13E. While the Diesel price hike (Rs5 on 13 September
and 45p on 18 January) has provided some support, the impact is expected to be only
marginal at-least in this fiscal (~Rs140bn decline or 14% of total oil subsidy burden in
FY13). However, further diesel hikes mean upside risks to inflation, thus delaying or
reducing the quantum of rate cuts and consequently delaying the pick-up in investment
cycle further.
Fig 15 - Subsidy trend (breakup) for FY13
(Rs.bn)
FY13 RCML Estimates FY13 Budget Estimates
1,200
1,000
1,000

800 750
700
610 610
600
436
400

200

0
Food Fertilizer Oil
Source: Budget 2012-13, RCML Research

The double whammy of lower tax/non-tax revenue collections (on lower growth) along Gross tax collections growth so far
with higher subsidy burden translated into a huge Govt. borrowing target for FY13 at (9MFY13) at 15% have fallen short of
Rs5.7trn, up sharply from Rs5.1trn last year, signaling little room for investment pick-up BE of 20%
by the Govt. However, a gradual easing of the RBI’s monetary stance, along with further


INDIA

reform push by the Govt., should result in a pick-up in private investments, albeit only
marginally, in FY14.

We expect borrowing levels to remain elevated in FY14, at around Rs5.7trn or so, but
importantly, as we’ve shown earlier, we do not expect the borrowing target of the Govt.
to be exceeded, and hence preclude any major negative surprise on yields in this regard
in FY14.
Fig 16 - Govt. borrowings via dated securities
(Rs trn) The Govt. has raised Rs 5.1trn in FY13
6.0 so far via dated securities vs. the
5.1 5.1 budgeted Rs5.7trn
5.0
4.4
4.2
4.0

2.7
3.0
2.0

2.0 1.7 1.7
1.5
1.4
1.1
1.1
1.0

0.0
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13TD
Source: RBI, RCML Research

Fig 17 - Govt. borrowings via T-Bills
(Rs trn)
The Govt. has raised Rs 6.3trn in FY13
7.0
6.3 6.3 so far via T-Bills
6.0

5.0

3.9
4.0 3.6
3.4
3.1
3.0
2.2
2.0 1.7
1.5

1.0 0.5 0.6
0.4

0.0
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13TD
Source: RBI, RCML Research

On the positive side, the Govt. can indirectly boost investment by
‘non-monetary’ steps:
1. Announcing various measures to channelize long-term capital into infrastructure
investment
2. A measured response on plan vs. non-plan expenditure rationalization in FY14,
3. Forcing PSUs to kick-start investment or pay dividends in order to help meet fiscal
revenue targets.
Moreover, a lower fiscal deficit would mean reduced Govt. borrowings which in turn
would dampen yields, and would induce a ‘crowding in’ effect on corporate credit/capex,
and support the INR on sentiment. As the chart below clearly shows, higher Govt.
borrowing over the years has been concurrent with rising yields.


INDIA

Fig 18 - Actual Govt. market borrowings vs. 10Y yield
(Rstrn) Actual market borrowings Avg. 10Y yield (%)
6.0 5.7 9.0
5.1
8.5
5.0 4.5 4.4
8.0
4.0
7.5

3.0 2.7 7.0

6.5
2.0 1.7
1.4 1.5
1.3 1.3
6.0
0.8
1.0
5.5

0.0 5.0
Source: RCML Research, FY13E are Budget estimates

Pro-cyclical measures/monetary easing key to spur growth
The capital expenditure/total expenditure ratio—a measure of capital spends by the With falling Govt. investment to
Govt.—has fallen from ~17% in FY01-FY08 to ~12% in Apr-Dec’13 as the Govt. cut down counter burgeoning subsidy burden
on its spending plan to counter ballooning non-plan revenue expenditure i.e. subsidies and subdued demand in the private
sector, pro-growth policy incentives
and falling tax collections. This has meant that while Govt. borrowing has increased
along with easing monetary policy
substantially at the expense of the private sector, the much-needed capital expenditure remain key to spur growth
has taken a hit (aggregate plan and non-plan capital expenditure in 9MFY13 at 12.4%
versus 13.7% budgeted). This could in turn hurt FY14 growth, our estimate for which at
5.8% is significantly below consensus and Govt.’s target of 6.5-7%.

While gross fixed capital formation as a percentage of GDP has been gradually falling
over last few years, down from 33% in FY10 to 31% now, what is worrisome is that the
private share of gross capital formation has also fallen from a high of ~39% in FY08 to
~29% in FY12. New project announcements have fallen 55%yoy this fiscal till date to
Rs3.4trn. The share of private projects has also been stagnant over the years, highlighting
the subdued sentiment in the private sector which has been the key driver of
investments during the past decade. This fall in investments could likely affect India’s
potential growth over the next few years.

We reiterate that to turn sentiment around from such an investment-led slowdown,
policy incentives are required in addition to an easy monetary policy, especially when the
scope for pro-cyclical expenditure by the government is limited.
Fig 19 - Private sector capex/GFCF (current prices)
(%) Private share of the gross capital
45% formation has fallen from a high of
40%
39.1% ~39% in FY08 to ~29% in FY12

35% 32.5% 32.6%
29.9% 29.1%
30% 28.5%
26.4%
25%
21.1%
19.1% 18.3%
20%

15%

10%

5%

0%
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Source: RCML Research, CMIE


INDIA

Fig 20 - Annual trend of new project announcements Fig 21 - Public & Pvt. share of outstanding investments
(Rstrn) (%) Govt. Private
25.0 23.1 100
21.0 90
20.0 18.1 80 33 35
16.5 16.1 44
70 56 58 61 61 61 57 60 59
67
15.0 60
10.2 50
10.0 8.8
7.6 40
30 67 65
4.1 56
5.0 3.0 3.4 20 44 42 39 39 39 43 40 41
2.3 33
10
0.0 0

Source: CMIE, RCML Research Source: CMIE, RCML Research


INDIA

Influence of the Budget on the markets
The Union Budget has had progressively lower importance in the past as the last few Significance of budget on the markets
budgets have avoided big-ticket policy reform announcements (unlike in the early 90s is falling as witnessed over last few
when game changing reforms were announced), which in any case tended to come years amidst lack of big-ticket reform
announcements
throughout the year instead of end-Feb. As such, we don’t expect this time to be any
different, especially given the recent reform rhetoric, as our table 24 on the following
page comprehensively illustrates.
The figures below suggest that budget influence on the market performance has been
declining. In 6/12 years, markets have seen negative returns. Also, in 8/12 times we have
different pre-post movement. In other words, a positive return in the month prior to the
budget is generally followed by a negative return in the month post the budget. What
could be different this time is the sustained PSU equity supply overhang that’s likely to
continue at least till the end of 1QFY14.
Fig 22 - Pre- and post-Budget market performance PSU equity supply is likely to continue
till June’13, as the Govt. tries to make
ends meet as long as we have a
favourable market

Source: Datastream, RCML Research

Fig 23 - Pre- and post-Budget market returns (1M)
(%) Run-up Follow-up Eight out of 12 times we have seen
15 13.2 markets performing in different
9.0 directions
10 8.2 7.4 7.5
7.3
5.1 4.6
5
1.0 1.4
0.9 0.3
0
(1.0)
(2.1)
(5) (3.1) (2.4) (2.6)
(4.0)
(5.0) (5.1)
(7.0) (6.9)
(10)
(9.0)

(15)
(15.1)
(20)
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Source: Bloomberg, RCML Research


INDIA

Fig 24 - Key reforms initiated by the Govt. in FY13, should continue till 1QFY14, or
till the equity supply is on
Date Reforms Description
Diesel hiked by Rs5 (12%), subsidized LPG cylinders limited to 6 per year. This would reduce fiscal burden
13-Sep Diesel price hiked by Rs5/ltr
by Rs200bn
Cabinet approves FDI in multi-
FDI allowed in multi-brand retail (upto 51%), aviation (upto 49%), broadcasting (49% to 74%), Power-
14-Sep brand retail, aviation, broadcasting,
trading exchanges (upto 49%)
power trading exchanges
Disinvestment approved in MMTC (9.33%), Oil India (10%), Nalco (12.15%), Hindustan Copper (9.59%).
14-Sep Disinvestment in PSUs
This would help the govt. meet Rs300bn disinvestment target for the year.
21-Sep External borrowing made cheaper Withholding tax on overseas borrowings (ECBs, long term infra bonds) cut to 5% from 20%
Rajiv Gandhi Equity Savings The FM approved the Rajiv Gandhi Equity Saving Scheme (RGESS) exclusively for the first time retail
21-Sep Scheme approved for retail investors in securities market. The Govt. has expanded the scope of this scheme from stocks to mutual
investors funds and ETFs, meaningfully changing the catchment area of funds for this scheme.
The cabinet approved the increase in FDI limit for Insurance to 49% from 26%, opened the pension sector
Cabinet approves FDI in Insurance,
04-Oct to foreign investment and also cleared the Companies Bill. Parliamentary approval awaited, but prima
Pension Funds and Companies Bill
facie positive for overall market, specifically, Insurance plays, infra plays.
Cabinet approves direct urea The Cabinet approved the new urea subsidy framework which proposes direct transfer of subsidies to end-
11-Oct subsidy transfer and Rs50/t hike in users (farmers) in a phased approach and also hike in urea prices by Rs50/t (current price Rs5,310) with
urea prices an aim to reduce the subsidy bill and address imbalance in use of soil nutrients due to the rising price gap.
Prime Minister Manmohan Singh constituted a high-power National Committee on Direct Cash Transfers in
PM sets committee on direct cash a bid to reduce corruption at the cutting edge. The committee is expected to facilitate the introduction of
25-Oct
transfer direct cash transfers to individuals eligible for benefits flowing out of the government’s many welfare
programmes.
Rajya Sabha clears FDI in multi- FDI in multi-brand retail cleared the final hurdle on 8th December when it got the approval of the Rajya
08-Dec
brand retail Sabha which voted against the motion to withdraw it. It has already got the Lok Sabha approval.
Cabinet gives nod to Land The Union cabinet cleared the land acquisition bill with some changes to the draft version passed by the
14-Dec
acquisition bill GoM in October
Cabinet Committee on Investment The Cabinet approved the formation of the much-awaited Cabinet Committee on Investment to provide
14-Dec
formation approved by the Cabinet fast-track approval to mega projects. This is the watered down version of the National Investment Board
New Urea Investment policy gets
14-Dec The CCEA approved the new urea investment policy
nod from CCEA
Lok Sabha passed the new Companies bill that brings the management of the corporate sector in line with
global norms. It introduces concepts like responsible self-regulation with adequate disclosure and
19-Dec Companies bill passed
accountability, ushers in enhanced shareholders’ participation and provides for a single forum to approve
mergers and acquisitions.
Parliament paved the way for corporate houses to enter the banking sector by approving the banking bill
20-Dec Banking Bill/Sarfesi law passed
and also passed the amendments to the debt recovery laws or Sarfesi law.
The RBI has raised ECB limit for infrastructure NBFCs to 75% of owned funds from 50% under the
ECB limit on infra NBFCs raised
07-Jan automatic route. This will apply to outstanding ECBs as well, and those above 75% will require approval
from 50% to 75%
from RBI. This reform comes at a time when the country needs $1trn investment in infra.
The finance minister on 14th Jan outlined the Govt.’s final reponse to the ‘GAAR Report’—
recommendations of the export panel headed by Dr. Parthasarathi Shome to examine the GAAR proposal
14-Jan FInMin red-lights GAAR
of the Finance Act 2013. Agreeing to most of the recommendations, the Govt. has now to some extent
mitigated concerns on the topic.
Govt decontrols diesel prices; cap The Govt. allowed the oil cos to raise the diesel prices by small amounts every month (45p/mth) and
17-Jan on subsidised LPG cylinders raised announced inclusion of bulk diesel prices in WPI calculation. The Govt. also increased the subsidized LPG
to 9 cylinders from 6 to 9
The Cabinet approved a 50% cut in the auction reserve price for CDMA spectrum. The decision could
17-Jan Govt. halves CDMA reserve price
prompt Russia's Sistema to participate in the auction process schedule for March.
The standing committee on food, consumer affairs, and public distribution on 17th Jan signed off on the
Committee clears bill on food
17-Jan food security bill that nearly matches the recommendation made by the Sonia Gandhi-headed National
security
Advisory Council (NAC).
The Govt. has raised import duty by 2% (4% to 6%) in order to reduce CAD and hope for a moderation in
Import duty on gold and platinum
21-Jan gold demand. The Govt. wants people to cut down their gold purchases, but this will be difficult as India is
raised to 6%
the world's largest gold importer.
The Govt. has increased the debt market limit for investments in Govt. and corporate bonds by $5.0bn
FII debt limit raised to US$25bn
24-Jan each. This is expected by the market as it will boost FII inflows into India that will fund the widening CAD.
from US$20bn to US$25bn
This was announced earlier (Nov’12) by the Govt. and has been operationalized now by SEBI.


INDIA

Wish-list/What can we expect
Mix of populist and reformist measures likely to be seen
Given slowing growth with no signs as yet of a sustained recovery yet on one hand, and A fiscally prudent, reformist and pro-
deteriorating public finances with the fisc expected to remain at elevated levels in FY13 investment budget is the need of the
on the other, the need for a highly frugal, reformist and pro-growth Budget is high, hour
especially when concerns on core inflation are slowly fading away. However, chances of
But likelihood of the one is poor given
one are also relatively poor in a pre-election year. We expect the Govt. to announce a
an election year. A mix of the two
mix of prudent and populist measures in this year’s Budget. looks
The street is looking up to the FM (finance minister) to further boost market sentiments
via a continued push on pro-investment reforms even as populist/inefficient expenditure
(welfare programs – NREGS, IAY, SSA, JRY, JNNURM, farm loan waivers) goes up in the
year as the Govt. tries to gain public confidence ahead of the general elections (charts
below show a sharp pick-up in welfare spending during election years). On more
mundane matters, we might see a dip in the STT (Securities Transaction Tax) for equities,
or see one coming in for commodities at last. Also expected is some form of
additional/incremental tax on high-net-worth individuals, particularly given the recent
statements of the FM on the topic.

We believe the markets will give a thumbs-up to a budget with a genuine intent to push
through reforms, boost the investment cycle and reduce subsidies through steps such as:

 Improvement in revenue-receipts by bringing in further hikes in the indirect tax
rates (preferably custom duties) and announcing a firm plan towards Goods and
Service Tax (GST) implementation.

What is GST?
GST is a value added tax that would replace all indirect taxes levied on goods and services
by the Indian central and state governments. However, due to non-consensus between
the central and state govt., the proposal is to introduce a dual GST regime – CGST and
SGST.

 Roadmap for rationalisation of subsidies and ultimately, market-linked prices
wherever possible, so that demand adjusts to the global commodity prices. While
diesel has been partially de-regulated, a comprehensive plan like this for other fuels
(kerosene, LPG etc) with clearly defined timelines for eventual de-regulation is
important.

 Improvement in the subsidy distribution mechanism to avoid leakages and ensure
targeted subsidy disbursal. Direct Cash Transfer (DCT) scheme is an important step
towards this. While DCT implementation has started from 1 January 2013, issues like
extensive Aadhaar coverage (only ~210mn people out of 1.2bn are Aadhaar card
holders) and financial inclusion (bank accounts) need to be addressed quickly for
faster and efficient roll-out of the scheme. The Govt. should announce a
comprehensive plan towards extensive implementation of the scheme.

What is DCT?
Direct Cash Transfers (DCT) is a scheme wherein the Govt. subsidy payments and other
benefits would be credited directly into the bank accounts of the beneficiaries. This
would help the Govt. reach out to identified beneficiaries, reduce leakages and hence
enhance efficiency of the welfare schemes.


INDIA

 Clear divestment agenda and policy and spreading the activity throughout the year
instead of concentrating it towards the end of year and resulting in another ONGC
episode in FY12.

 Opening doors for FDI to new sectors and expanding the limits further in the sectors
where it’s already allowed.

 Abolishing or reducing the short-term capital gains tax on various asset classes.

What are short-term capital gains?
Investments in any asset class if held for a very short period (less than a year except for
real estate where the holding period is three years) is taxed as short term capital gains.
Except equity, short-term gains on which are taxed at 15%, that from other assets is
included in investor's income and taxed at slab rate.

Fig 25 - Short-term capital gain tax structure for various asset classes
Asset Holding period for short-term gains Tax Rate*
Equity < 1 year 15%
Debt < 1 year Added to income
Gold Physical/e-Gold: <3 years Added to income
ETF/Gold MF: <1 year
Real Estate < 3 years Added to income
Bonds/NCD < 1 year Added to income

 Lowering Securities Transaction Tax (STT) and addressing the issue of its double
incidence (levied on every buy and sell transaction), thus helping broaden the
market participation, boosting investor confidence amidst weak market sentiments,
and ensuring adequate liquidity in the system.

What is STT?
STT, first introduced in 2004, is the tax levied on purchase or sale of equity shares and
derivatives. Currently, 0.1% of the transaction value (revised downwards from 0.125% in
July’12) is levied on the sale and purchase of equity shares.

 Boosting infrastructure investment by

o Raising infra bonds’ issuance target for the year,

o Allowing commercial banks to issue tax-free infra bonds. Currently only state-run
infrastructure firms are allowed to issue these bonds.

o Introducing separate limit/carve-outs for tax-free infra bonds. Tax exemption on
tax-saving infra bonds up to a maximum of Rs20,000 was again included in the
Rs1lac limit in the last budget. Increasing this limit to Rs50,000 and separating it
from the Rs1lac investment limit for tax exemption would channelize retail savings
into the infra sector and widen the investor base, thus providing much-needed
long-term financing for the sector.

o Allowing insurance companies to have higher exposure to infra bonds (providing
tax breaks for debt funds).

 Easing bond issuance for the private sector thus promoting the bond market in India
which is still very nascent compared to the equity market.


INDIA

 Govt. spending on rural welfare programs like NREGA, IAY, and SSA etc. had risen
sharply with UPA-II in 2009, but has petered out in recent years on lower income
growth and utilization. We do not foresee a sharp rise this time around.
Fig 26 - Govt. spending on rural employment – NREGA* Fig 27 - Govt. spending on rural housing – IAY*
(Rs.bn) (Rs.bn)

450 120
391 103
400 368 100
358
330 100 90
350 310 79 79
300 80
250
60
200
129 142 36
150 117 40
25 26
100
20
50
0 0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13BE FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13BE
Source: RCML Research, Budget Documents *Key head is National Rural Source: RCML Research, Budget Documents *Key head is Indira Awas Yojna
Employment Guarantee Scheme

Fig 28 - Govt. spending on rural education – SSA* Fig 29 - Govt. spending on rural infrastructure – PMGSY*
(Rs.bn) (Rs.bn)

120 250
224 217
102
100
200 182
83 168
80 72 71 152
150
60 106
43 47
37 100
35
40
51
50 38
20

0 0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13BE FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13BE
Source: RCML Research, Budget Documents *Key head is Sarva Shiksha Source: RCML Research, Budget Documents *Key head is Pradhan Mantri Gram
Abhiyan (SSA) Sadak Yojana


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