Recent successes in state elections, setting a positive backdrop, have now focused attention on India’s upcoming Interim Budget for 2024. Rather than grand populist gestures, there’s an expectation of a shift towards policy continuity and sustainable growth. This blog explores the diverse expectations from Budget 2024, delving into key areas poised to shape the economic landscape.
1. Fiscal Discipline and Revenue Generation
Budget 2024 is anticipated to adopt a measured fiscal stance, aiming for a disciplined approach despite potential moderation in disinvestment targets.
The government aims to reduce the fiscal deficit to 5.4-5.5% of GDP for FY25, reflecting its commitment to financial prudence amidst economic challenges.
Tax reforms and robust revenue generation, targeting Rs 18.2 lakh crore in net direct tax collection for the current fiscal, are integral to achieving fiscal goals.
2. Rural and Women Empowerment
Expect the Budget to introduce strategic measures that stimulate demand in both rural and urban areas.
Foreseeing the revival of economic activity, authorities anticipate making potential adjustments in tax slabs and incentives.
Increased allocations under rural schemes, with a focus on MNREGA, skill development, and the PM Kisan scheme, demonstrate the government’s commitment to empowering women and addressing rural distress.
3. Infrastructure Development
A shift in government spending on infrastructure is predicted, emphasizing a measured pace of growth and incentivizing private capital spend.
Allocations for roads, railways, urban infrastructure, and energy transition, including green hydrogen and battery storage, are likely to be key highlights, aiming to address modest private capital spend in manufacturing and housing.
4. Boost to Domestic Consumption
Measures to stimulate domestic consumption, especially in the context of weak consumer sentiments, are expected.
A touch of populism, focusing on the rural sector, may include interim tax relief and an increased standard deduction limit. Extensions of schemes like PMGKAY and potential increases in rural scheme allocations aim to boost consumption demand domestically.
5. Market Outlook and Investment Strategies:
The market outlook for 2024 remains positive, driven by political stability, robust corporate earnings, and a healthy economic growth trajectory.
Although valuations may appear stretched, analysts anticipate a preference for large-caps and value stocks at reasonable prices.
Sectors such as Pharma, two-wheeler Auto, and IT Services are anticipated to outperform, aligning with broader multi-year investment themes.
What the Market Wants from FM Smt Nirmala Sitharaman
1. CryptoMarket Expectations:
Despite enabling Central Bank Digital Currency (CBDC), there’s hope for a comprehensive policy on cryptocurrency regulation, crucially relying on positive strides in G20 summit discussions for establishing a regulatory framework.
2. Policy Announcements
Expectations include policy announcements or extensions, focusing on extending the flagship incentive scheme for manufacturing electric vehicles (EVs) into the next financial year.
3. Double Taxation on Dividends
Current double taxation on dividends is viewed critically, with market participants, including notable investors like Vijay Kedia, expressing discontent. Relief from this double taxation is anticipated
4. LTCG Relief
Expectations for relief on Long-Term Capital Gains (LTCG) tax to encourage increased investor participation in the stock markets, despite no government indication on this long-standing demand.
5. STT Removal/Reduction
Analysts anticipate the removal or reduction of the Security Transaction Tax (STT), particularly in the cash market, a demand persistent for several years.
These points highlight the key aspects of the Fintoo insider report, emphasizing the unprecedented budget for railroads and the optimistic expectations and focus on critical projects in the defence sector for the fiscal year 2024–25
Railroad Budget in FY24–25
1. Estimated Budget
Expectations are high that the budgetary allotment for railroads will surpass Rs 3 Trillion in the fiscal year 2024–25.
2. Unprecedented Increase
This marks a significant 25% increase over the budget allocated in the prior fiscal year.
3. Historic Figures
The projected budget reaches previously unheard-of figures, signifying a substantial financial commitment to the development and enhancement of the railway infrastructure.
Defence Sector Expectations
1. Optimistic Outlook
There is a positive outlook for the defence sector in FY24–25.
2. Adherence to Plans
Anticipation that the government will adhere to its existing plans for defence acquisitions, focusing on critical projects.
3. Emphasis on Projects
Notable attention is expected on crucial projects such as the purchase of 97 Tejas Mark-1A Aircraft and the acquisition of a second indigenous Aircraft Carrier.
Capital Expenditure Predictions
1. Increased Spending
Experts predict a 5–7% increase in capital expenditures for the defence sector.
2. Defence Capabilities Enhancement
The additional funds are expected to be allocated towards improving defence capabilities, emphasizing the importance of technological advancements and modernization.
Survey Conducted By FINTOO
Fintoo recently conducted a “Survey on Expectations from Budget 2024 Date and Expectation” involving Salaried, Self-employed, HNIs & Ultra HNIs from various professional backgrounds, revealing diverse perspectives on India’s economic future. About 50% of respondents expressed a highly optimistic outlook about India’s economic growth prospects in the upcoming year.
Another 38% within this group had average expectations and expressed concerns. They cited factors such as potential turmoil, the need for specific policy changes, or a cautious wait-and-see approach. Also, 12% did not have much expectations, adopting a moderate stance and anticipating growth while remaining uncertain about its extent.
It is evident that while a significant portion of respondents remained positive, a diverse range of opinions existed within the surveyed cohort, reflecting varying degrees of optimism and caution regarding India’s economic future.
What does the Real Estate Sector expect?
Builders are hopeful for industry status, improving access to loans. Developers seek provisions to reduce interest rates on project finance and lower GST on construction materials.
What the Finance Minister Can Do for the Agri Sector?
While the government implemented various policies to double farmers’ income, an update on recent numbers and laying a path for further agricultural reform is expected.
Clarity on the Poverty Index
The ongoing debate on the poverty index, despite not being directly on the Budget, may receive attention in the FM’s speech, providing clarity on the poverty debate.
Beyond Elections
Capital markets hope for key long-term measures, limitations on long-term capital gains, and 80C exemptions. Simplification of tax structures on various investment instruments could enhance diversification. A critical balance between required spending for growth and fiscal deficit control is crucial for market stability.
Income Tax Rebate Hike Unlikely, Says Inside Expert:
A senior finance ministry official suggests an unlikely increase in tax rebates under the new direct tax regime. Speculations of a possible increase in personal income tax rebate are dispelled, but an exemption from tax collected at source on individual overseas spending is expected.
Energy Sector Expects Fund Allocation
India’s energy sector expects emphasis on cleaner fuels like green hydrogen and natural gas. Anticipate reforms for city gas distribution players and expect announcements to encourage the adoption of renewable energy.
Tourism Sector’s Requests
MakeMyTrip’s CEO suggests rationalizing GST rates and allowing GST credit for hotel construction to make accommodations more affordable. Propose a broader policy framework to boost air travel frequency and tourism, affecting ATF costs.
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Budget 2024 Expectation:
As India eagerly awaits the unveiling of Budget 2024, expectations center around sustainable growth, fiscal prudence, and targeted initiatives to boost key sectors. In the coming fiscal year, the government aims to establish a roadmap for economic prosperity by focusing on infrastructure, rural development, and tax reforms.
The Budget, set for announcement on February 1, 2024, holds the promise of shaping a new chapter in India’s economic journey. Stakeholders are keenly watching how these expectations materialize into policies and actions that drive the nation’s economic trajectory forward. Stay tuned for insightful analyses and updates as the Budget unfolds.
Also Read: Budget 2024 Live Updates
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