Budget 2024 Expectations: A look at key sectors that will be in focus this year (2024)

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'm a seasoned finance expert with years of hands-on experience in analyzing budgetary policies, economic trends, and investment strategies. My expertise spans various sectors including finance, infrastructure, energy, manufacturing, and consumer goods. I've closely followed and analyzed government budgets, understanding their implications on markets, industries, and the economy as a whole.

Now, delving into the concepts mentioned in the article about the interim Budget 2024:

  1. Revenue and Expenditure Estimates: These are projections made by the finance ministry regarding the government's income and spending for the upcoming fiscal year. The article suggests that Finance Minister Nirmala Sitharaman will present estimates for revenue, expenditure, and financial performance in the interim budget.

  2. Fiscal Deficit: This refers to the difference between the government's total revenue and its total expenditure. The article mentions that the fiscal deficit for the fiscal year 2024 is expected to be pegged at 5.5% of GDP.

  3. Key Sectors in Focus:

    • Defence, Railways, and Infrastructure Development: The interim budget is expected to allocate higher funds to these sectors, consistent with the government's priorities.
    • BFSI (Banking, Financial Services, and Insurance): The focus is on increasing government capital expenditure (capex) which is anticipated to benefit sectors such as infrastructure, banking, and insurance.
    • Structural Growth Enablers: Emphasis on infrastructure, expansion of sectors under the Production-Linked Incentive (PLI) scheme, and a push towards green energy.
    • Energy: Anticipation of measures to achieve a cleaner and sustainable future, with a focus on green hydrogen, natural gas, and renewable energy.
    • Electric Vehicles (EV): Expectations of incentives to promote EV adoption, investment in charging infrastructure, and relaxation of import duties on EV components.
    • Automobiles: Likely focus on boosting rural consumption and providing support for discretionary spending, with continued subsidies under schemes like FAME.
    • Real Estate: Expectations of growth-focused measures, improved road connectivity, enhanced rail infrastructure, and potential tax rate cuts to sustain momentum.
    • Manufacturing: Focus on promoting the Make in India policy and supporting PLI schemes.
    • FMCG: Investments in digital infrastructure, skill upgradation, job creation, and MSME development to indirectly revive consumption spending.
  4. Budgetary Measures: These include extending schemes like housing for all, reducing GST on certain insurance products, and providing subsidies under programs like FAME to support various sectors.

Overall, the interim budget is anticipated to address key sectors and structural growth enablers while also focusing on promoting sustainability and economic development.

Budget 2024 Expectations: A look at key sectors that will be in focus this year (2024)
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