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Business News/ Budget / Budget Expectations/  Budget 2024: What will the market look for in Vote on Account?
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Budget 2024: What will the market look for in Vote on Account?

In an election year, the government does not present a full-fledged Budget for the whole year, instead, the government prepares an interim budget or a Vote on Account.

Union Finance Minister Nirmala Sitharaman . (ANI Photo) (Ministry of Finance-X)Premium
Union Finance Minister Nirmala Sitharaman . (ANI Photo) (Ministry of Finance-X)

With the results of the State Assembly elections announced and the focus shifting towards next year's General Election, market analysts anticipate that the upcoming Central Budget in February may not be a significant event for the stock market as it may not include significant groundbreaking announcements. This is because it will be a Vote on Account rather than a full Budget.

In an election year, the government does not present a full-fledged Budget for the whole year, instead, the government prepares an interim budget or a Vote on Account. The full Budget for the next fiscal year, that is, FY25 will be presented only after the formation of the new government post the General Elections.

Union Finance Minister Nirmala Sitharaman while addressing CII Global Economic Policy Forum 2023 Summit on Thursday, December 7, said that the Union Budget 2024 scheduled to be presented on February 1 is unlikely to make any "spectacular announcements".

“I don’t want to be a spoilsport, but the 1st February Budget is just a Vote on Account; a Budget to meet expenditure till the next government comes to power. No spectacular announcements. You will have to wait till after the General Election," Sitharaman said.

Also Read: Budget 2024: Upcoming Budget just a vote on account, says FM at CII Summit 2023

Unlike the full Budget, a Vote on Account contains just the government's expenses.

A vote on account is an advance grant to the government from the Consolidated Fund of India to cover short-term expenditure requirements. Before the General Election, the government seeks a Vote on Account to meet essential expenses. After the elections, the new government is responsible for presenting the full budget. Notably, the vote on the account cannot impact the tax regime.

Also Read: Budget 2024: What is Vote on Account? Significance and more…

What will the market look for in Vote on Account?

Experts do not expect big announcements in Vote on Account on February 1. They say the full Budget for the next financial year will come in July which will be a significant event for the market.

Deepak Jasani, Head of Retail Research at HDFC Securities pointed out that the Vote on Account cannot impact the tax regime.

"A Vote on Account is merely an interim authorisation to spend money, as opposed to a full Budget that includes details of expenditures and receipts, including tax changes and government policies. Hence, we do not expect policy changes from the Vote on Account," said Jasani.

However, Jasani underscored that Dalal Street expects some of the following and more from the next full Budget:

1. The Credit Guarantee Scheme for micro and small enterprises can be revamped and enhanced.

2. Production-linked incentives (PLI) for more industries and components.

3. Measures to boost exports of primary and secondary goods and services.

4. Encourage research and development for the use of artificial intelligence (AI) in various areas.

5. Increase budget allocation for the research and development (R&D) activities in the high-technology manufacturing sectors, such as semiconductors, medical devices, defence and aerospace, clean technologies, and intermediary goods manufacturing advanced manufacturing inputs and materials.

6. Simplifying the Indian capital gains tax regime to boost capital markets.

Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, believes the Budget 2024 may have a strong emphasis on long-term development while attempting to fortify the financial system.

"Domestic manufacturing, energy, healthcare, pharma, and technology will be in focus which would help sustain the economic growth in the coming years. Besides, key sectors such as semiconductors, key materials, mass manufacturing, telecom, etc., are expected to receive policy push," Lunawat told Mint.

Also Read: Budget 2024: Manufacturing, energy, pharma to be in focus this time, says Mahavir Lunawat of Pantomath

Read all market-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: 07 Dec 2023, 02:38 PM IST
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