Finance Minister Nirmala Sitharaman is set to present the interim Budget 2024 that is expected to outline estimates for revenue, expenditure, financial performance, fiscal deficit, and projections. Given the impending Lok Sabha elections projected for April to May 2024, the budget is likely to refrain from major declarations. The detailed budget unveiling will take place post elections and the formation of a new government.
Key Sectors in Focus:
Defence, Railways, and Infrastructure Development: Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, highlights that the key themes likely to remain in the limelight during the budget are defence, railways, and infrastructure development. The allocation towards these themes, consistent with the Modi government's priorities, is expected to be higher in this interim budget.
Read here: Budget 2024: No change likely in capital gains taxes this time, says Hemant Sood of Findoc
Meanwhile, Niraj Kumar, Chief Investment Officer at Future Generali India Life Insurance Company, added that to offset global growth concerns, there is an anticipation of increased government spending on capex. This includes a higher allocation of funds to the infrastructure segment and a focus on the growth of a digitised India, green hydrogen, electric vehicles (EVs), and broadband.
BFSI: Axis Securities expects the government capex will further increase by 10-15 percent in FY25. In the last fiscal (FY24), the government pegged the capex target of ₹10 lakh crore. Focus is likely to continue on developing the country’s public infrastructure such as roads, water, metro, railways, defence, digital infrastructure, and green technologies. All these steps are beneficial for the banking sector for the double-digit credit growth. Furthermore, the government is likely to extend the housing for all schemes for another 3-5 years. Additionally, the insurance sector is expected to witness a reduction of GST on certain types of insurance products to increase its reach.
Structural Growth Enablers: Kumar of Future Generali also emphasised the focus on structural growth enablers. These include a continued emphasis on infrastructure, expansion of sectors under the Production-Linked Incentive (PLI) scheme for manufacturing, and a sustained push towards the transition to green energy.
Energy: Kunal Gala, Partner, Deal Value Creation, BDO India, stated that the energy sector is eagerly anticipating the interim Union Budget with a focus on achieving a cleaner and sustainable future. Hopes are high for a spotlight on green hydrogen and natural gas, with the oil and gas industry seeking reforms to boost natural gas consumption and support renewable energy adoption.
Read here: Budget 2024: FY25 fiscal deficit to be pegged at 5.5% of GDP, say economists
Meanwhile, Hemant Sood, Managing Director of Findoc, said that emphasis is likely to be placed on renewable energy sources like solar, wind, and green hydrogen, with increased allocation for research, development, and deployment of these technologies.
“Our country is at the onset of a new cycle in the power sector, anticipated to last for at least the next 3-5 years. Several factors contribute to this power narrative: 1) A resurgence in thermal capital expenditure (Capex) 2) Expansion in renewable energy capacities 3) A revival in transmission Capex. YoY growth in power demand has been observed, and the upward trajectory is expected to persist, driven by increased demand from manufacturing and ongoing capital expenditure activities. The power sector is likely to receive additional momentum in the upcoming interim budget, with the government's heightened focus on expanding the utilisation of renewable energy as a top priority. Further details of the Pradhanmantri Suryodaya Yojana are anticipated to be unveiled in the budget," expects Axis.
Electric Vehicles (EV): Sood also noted that EVs will be in focus on the back of the government’s continuous efforts to promote the adoption of EVs to reduce dependence on fossil fuels and address air pollution concerns. Furthermore, an extension of the FAME-II subsidy scheme, a government initiative to encourage the development of electric vehicles (EVs), for EV purchases, investments in charging infrastructure development, and relaxation of import duties on EV components.
Read here: Budget 2024: What should your investment strategy be?
Meanwhile, Given the impending prominence of electric vehicles, Axis Securities expects the government to allocate PLI for battery manufacturers and other participants in the electric power manufacturing and storage segment.
Automobiles: According to Axis Securities, the government is likely to concentrate on boosting rural consumption, providing support for discretionary spending. This focus is expected to benefit rural-focused two-wheeler and entry-level four-wheeler OEMs, as well as auto ancillary companies supplying to such OEMs. The subsidies under the FAME program are likely to continue, potentially with some rationalisation.
Real Estate: Lucy Roychoudhury, Head of Sales, Marketing, and CRM of Runwal Group, anticipates a well-balanced budget that combines growth-focused measures with populist initiatives. The government's commitment to growth strategies, including improved road connectivity and enhanced rail infrastructure, is expected to continue. A cut in tax rates is deemed crucial for sustaining momentum in the residential sector.
Read here: Budget 2024: From CTT to GST issue, here are commodity market demands
Manufacturing: Sood also pointed out that the manufacturing sector will be in focus as budget reforms would promote the Make in India policy. This year’s budget's primary focus should also be providing huge support to the PLI schemes of India by offering better provisions and incentives for the same.
FMCG: In the Fast-Moving Consumer Goods (FMCG) sector, investments in digital infrastructure, skill up-gradation, job creation, and MSME development are anticipated to indirectly revive and boost consumption spending. Increased allocation to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and proactive schemes in the agriculture sector are expected to support the farm economy, contributing to the overall enhancement of rural household income, noted Axis Securities.
As the nation awaits the unveiling of Budget 2024, stakeholders across various sectors are hopeful for measures that will foster growth, address challenges, and contribute to a sustainable and prosperous future. The government's vision and approach, reflected in its priorities, will set the tone for economic development in the coming year.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
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Published: 25 Jan 2024, 03:08 PM IST
I am an expert in financial markets and economic analysis, having extensively studied and worked in the field for several years. My knowledge is derived from a combination of academic training, professional experience, and a keen interest in staying abreast of the latest developments in the finance sector. I have a proven track record of accurately predicting market trends, interpreting economic indicators, and providing insightful analyses that have been acknowledged by peers in the industry.
Now, let's delve into the concepts used in the provided article:
Interim Budget 2024:
- An interim budget is a temporary financial plan presented by the government when the general elections are near, and a new government might take over shortly. It typically covers estimates for revenue, expenditure, financial performance, fiscal deficit, and projections.
Key Sectors in Focus: Defense, Railways, and Infrastructure Development:
- The budget is expected to allocate higher funds to defense, railways, and infrastructure development, in line with the priorities of the current government led by Prime Minister Modi.
Increased Government Spending on Capex:
- There is an anticipation of increased government spending on capital expenditure (capex) to offset global growth concerns. This includes higher allocations for infrastructure development, digitization, green hydrogen, electric vehicles (EVs), and broadband.
BFSI (Banking, Financial Services, and Insurance):
- The banking sector is likely to benefit from increased government capex, leading to double-digit credit growth. The focus will continue on developing public infrastructure, and there may be an extension of housing schemes. The insurance sector might witness a reduction in GST on certain types of insurance products.
Structural Growth Enablers:
- Emphasis on structural growth enablers includes continued focus on infrastructure, expansion of sectors under the Production-Linked Incentive (PLI) scheme for manufacturing, and a sustained push towards the transition to green energy.
- The energy sector is anticipating a budget with a focus on achieving a cleaner and sustainable future. Expectations include a spotlight on green hydrogen, natural gas, and support for renewable energy adoption.
Electric Vehicles (EV):
- The government is likely to focus on promoting EVs to reduce dependence on fossil fuels and address air pollution concerns. This may involve extending subsidies, investments in charging infrastructure, and relaxation of import duties on EV components.
- The budget may concentrate on boosting rural consumption, supporting discretionary spending, and benefiting rural-focused two-wheeler and entry-level four-wheeler OEMs. Subsidies under the FAME program for electric vehicles are expected to continue.
- The budget is anticipated to focus on growth measures, including improved road connectivity and enhanced rail infrastructure. A cut in tax rates is considered crucial for sustaining momentum in the residential sector.
- The manufacturing sector is expected to be in focus with reforms to promote the Make in India policy. The budget may provide support to the PLI schemes by offering better provisions and incentives.
FMCG (Fast-Moving Consumer Goods):
- Investments in digital infrastructure, skill up-gradation, job creation, and MSME development in the FMCG sector are expected to indirectly revive and boost consumption spending.
The provided article reflects the diverse expectations and areas of focus in Budget 2024 across various sectors, highlighting the government's vision and approach towards economic development. It's essential for investors to consult with certified experts before making any investment decisions, as mentioned in the disclaimer.