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Business News/ Budget / Budget Expectations/  Budget 2024: What measures can give further impetus to the economy?
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Budget 2024: What measures can give further impetus to the economy?

The full Budget for the next fiscal year, that is, FY25 will be presented in July after the formation of the new government post the General Elections.

Union Finance Minister Nirmala Sitharaman . (ANI Photo) (ANI)Premium
Union Finance Minister Nirmala Sitharaman . (ANI Photo) (ANI)

Even though the upcoming Budget will be a Vote on Account rather than a full Budget ahead of the General Elections in 2024, there is widespread optimism that the government will prioritise fiscal prudence while unveiling initiatives aimed at fostering economic growth.

The full Budget for the next fiscal year, that is, FY25 will be presented in July after the formation of the new government post the General Elections.

It is unlikely that the government will make big-bang announcements in the Budget on February 1. Consequently, the chances of announcements of measures that could provide further impetus to the economy and bolster market sentiment are feeble. Nevertheless, analysts believe that the government's announcements to invigorate the manufacturing sector and amplify capital expenditure would wield considerable influence on the Indian economy's trajectory.

G. Chokkalingam, Founder and Head of Research at Equinomics Research Private Limited believes the strategic sales of PSUs and the use of that money to increase the capital expenditure further will give a significant boost to the economy.

"The strategic sales of PSUs and the use of that money to increase the capital expenditure further will give a significant boost to the economy because our manufacturing GDP has come down to nearly 18-20 per cent," said Chokkalingam.

"The government also considering improving the manufacturing sector to generate more rural and semi-urban jobs. In my view, there are many PSUs in the minerals, mining and logistics sectors, which the government need not run. So the government should go for strategic sale and use that money for aggressive capex for promoting the manufacturing sector's GDP share increase," Chokkalingam said.

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India's economy is in a good shape. India's Q2 (July-September quarter) GDP (gross domestic product) grew 7.6 per cent, significantly exceeding expectations.

After its latest policy meet last week on Friday, the Reserve Bank of India (RBI) raised the country's real GDP growth projection for FY24 to 7 per cent from 6.5 per cent earlier with Q3 GDP at 6.5 per cent (against the estimates of 6 per cent earlier) and Q4 GDP at 6 per cent (against the estimates of 5.7 per cent earlier). The real GDP growth projection of the RBI for Q1FY25 is at 6.7 per cent, for Q2FY25 is at 6.5 per cent and for Q3FY25 is at 6.4 per cent.

Also Read: RBI MPC Meeting: Repo rate unchanged; growth forecast raised; 7 key highlights of December policy meeting

No fireworks in the interim budget

Many experts point out that after the impressive victory in the recent assembly elections, the BJP will not be under pressure to present a populist budget. In this case, it will focus more on its fiscal responsibilities.

"We don't expect any major announcements in the Vote on Account. The fiscal deficit may be targeted at 5.2 per cent of GDP, halfway between the FY24 Budget estimate and the medium-term target," said Aditi Nayar, Chief Economist, Head of Research and Outreach, ICRA.

Ashutosh Tiwari, Managing Director and Head of Institutional Equities at Equirus believes with the election in 2024 around, the upcoming Budget will be balanced. Along with growth orientation, it will also include populist measures with a focus on rural and lower strata of society which have been under distress post-Covid, Tiwari said.

"Women welfare schemes like Ladli Behna in Madhya Pradesh are considered to be one of the major reasons behind big wins of the BJP in recent state elections and, therefore, it is quite likely that the government might announce more women welfare-related central schemes in the 2024 Budget," said Tiwari.

Also Read: Budget 2024 may be balanced; NDA's win in 2024 may not trigger any sharp rally, says Ashutosh Tiwari of Equirus

Nilesh Shah, Managing Director at Kotak Mahindra AMC said, "From an investor perspective, we want accelerated and sustainable GDP growth. That can be achieved by higher infrastructure investment and fiscal prudence. The path to fiscal prudence is through asset demonetisation."

"The Budget must also create a level playing field among various savings products from tax, disclosure and investor protection point of view. The budget should carry forward the improvements in ease of doing business by reducing compliance burden," Shah said.

Also Read: Budget 2024: What will the market look for in Vote on Account?

Read all Budget-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 11 Dec 2023, 01:49 PM IST
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