Budget 2024 Expectations: Economy, Sectors, and Markets

Budget 2024 Expectations: Economy, Sectors, and Markets

With Finance Minister Nirmala Sitharaman scheduled to present the Interim Budget on 1st February 2024, anticipation is rife among traders, investors, and various industry sectors. This budget, set against the backdrop of the upcoming General Elections, will lay down the fiscal blueprint for the year ahead, shaping economic policies and market directions.

You can get all the LIVE budget updates here: Union Budget 2024 Updates

The interim budget for 2024–2025 serves as a precursor to the comprehensive post-election Union Budget.

This interim declaration is pivotal, as it sets the initial economic agenda and reflects the government's priorities until the new government is elected as well as for the forthcoming fiscal year.

Stakeholders across the board are keenly awaiting policy announcements that could impact market dynamics and investment strategies.

Let us have a look at what is expected from the Budget 2024.

Expectations Across Sectors

Taxation Expectations

• Standard Deduction Revamp: The anticipation of an increase in standard deduction, a change long overdue since 2019, is high. A progressive amendment, potentially linking standard deduction to a percentage of salary, could level the playing field for employees across various income brackets.

• Income Tax Relief Hopes: With every budget, the clamour for easing income tax burdens grows louder. Expectations of revised tax slabs and enhanced exemption limits are prevalent, reflecting the public's desire for more disposable income and financial relief.

Spending and Overseas Transactions

• Exemption on TCS: A potential waiver on tax collection at source (TCS) for overseas credit and debit card expenditures could spur international spending, a move that might have broader implications on foreign exchange dynamics and consumer behaviour.

Healthcare and Insurance

• Enhancing Health Insurance Deductions: In light of escalating healthcare costs, there's a significant demand for increasing the Section 80D deduction limits for health insurance premiums – a change that would benefit a large segment of the population.

• Expansion of Ayushman Bharat: Increasing the insurance coverage under Pradhan Mantri Jan Arogya Yojana (PMJAY) reflects a substantial commitment to enhancing healthcare accessibility, a move that could have far-reaching effects on public health and the insurance sector.

• The Indian Pharmaceutical Alliance, an association of major Indian pharma manufacturers, has proposed that the 2024 Budget should accelerate the pace of life-sciences innovation & Research & Development. They noted that the Indian pharma sector aims to achieve market size of $120–130 billion by 2030 and $400-450 billion by 2047, from the current market size of around $50 billion.

Financial Markets and Investments

As per the Industry, the budget should take measures to boost economic growth in the country as India marches towards becoming the 3rd largest economy in the coming years. Industry body CII has suggested the launch of the 'National Mission for Advanced Manufacturing' to enhance quality and productivity in manufacturing.

• STT Revisions: The trading community is hopeful for a revision or removal of the Security Transaction Tax (STT), especially in the cash market. Such a change could invigorate market participation and influence trading volumes.

• Divestments: There is an expectation on increase in divestments post-elections to leverage the good performance of public sector undertakings (PSUs) in various sectors.

• Cryptocurrency Framework: With digital currencies gaining prominence, a clear regulatory framework post the G20 Summit discussions could define the trajectory of crypto markets in India.

Sector-Specific Expectations

• Railways and Infrastructure: The Railways, a critical component of India's infrastructure, might see substantial budget allocations. Investments in fuel-efficient Vande Bharat trains and infrastructure upgrades could be on the agenda.

• Pharmaceutical Sector: Given its high-risk, high-reward nature, the pharma sector is eyeing substantial support from the government. This could include incentives for research and development, as well as policy measures to boost manufacturing and exports.

• Real Estate Hopes: The demand for granting industry status to real estate reflects the sector's need for easier credit access. Additionally, expectations of reduced interest rates on project finance could invigorate the sector, potentially impacting housing affordability and market growth.

• Energy Sector Focus: Investments in sustainable energy solutions and support for the oil and gas industry are anticipated, aligning with global environmental goals and energy security needs.

• Agriculture Sector: Post the challenges posed by El Nino, substantial budgetary support for agriculture is expected. This may include initiatives for climate-resilient farming, enhanced subsidies, and support for rural infrastructure.

What's at Stake for Traders?

Short-term market players will be on the edge of their seats tracking the markets during budget announcements. The immediate aftermath of the budget announcement often sees significant market volatility. Traders are generally keen on tax reforms, especially any changes in the Securities Transaction Tax (STT) or Commodity Transaction Tax (CTT). They'll also be watching out for announcements affecting specific sectors like tech, auto, pharma, or infrastructure, which can trigger swift sectoral shifts.

Long-term Investors

The investment community scout for clues that spell long-term growth during the Budget phase. They're less concerned with immediate fluctuations and more with policies that shape the economic landscape over years. Their key areas of interest will generally include capital gains tax regulations and measures to bolster market integrity and transparency. A budget that signals stability and growth can be a beacon for long-term investments, especially in burgeoning sectors like renewable energy and digital infrastructure.

Industry Expectations

Industry experts, armed with analyses and predictions, have their version of a wishlist. Financial analysts will look for a budget that continues to support recovery and growth, especially for hard-hit sectors. They also look forward to push towards digitalisation and sustainable development that aligns with global economic trends.

Conclusion

There are many expectations from the Union Budget 2024 right from the sectors, to markets, and the economy at large.

For traders and investors, understanding the nuances of this budget is the key.

The budget's impact on various sectors will shape investment strategies and market dynamics.

So, as we approach the budget announcement, staying informed and adaptable is important.

This budget is not just about immediate reactions; it's about understanding the long-term implications and aligning investment strategies to leverage the opportunities it presents.

To know more on the Budget 2024 and how it impacts your life, click here: #BeyondTheBudget

And stay tuned to this space for all the latest developments and expert insights. Happy learning!

Sources: Kotak Securities, Economic Times, Livemint, Moneycontrol

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.