Budget 2024: No change likely in capital gains taxes this time, says Hemant Sood of Findoc

Edited excerpts.

What are your expectations for this budget?

With India's G20 presidency and a keen eye on becoming the 5th largest economy, maintaining fiscal stability will be crucial. Balancing tax revenue with increased spending on infrastructure and social welfare programs will be a delicate task. From the upcoming budget, we are expecting that the government will definitely opt for the policies and measures that will enhance internal growth and investments, strengthen youth by creating more job opportunities, and take corrective measures to control inflation, all while keeping the deficit in check.

Agriculture, healthcare, education, and green energy are some sectors competing for attention. Budget allocations for these areas will influence rural livelihoods, access to quality healthcare and education, and India's progress towards sustainability goals.

Read here: Budget 2024: FY25 fiscal deficit to be pegged at 5.5% of GDP, say economists

We’ve seen the rising fuel prices and living costs have squeezed the middle class. The budget could offer tax reliefs, targeted subsidies, or increased spending on healthcare and education to address their concerns. Additionally, measures to support vulnerable sections like farmers, women, and minorities will be closely watched.

While the full picture will appear on February 1st, these are some of the key themes to keep in mind as we approach the upcoming Indian budget.

What are your views on capital gain taxes? Should they be tinkered with?

As there is a positive rally in the market, long-term tax which is 10 percent would come into play and increase government revenue. The revenue that the government possesses through these taxes could act extremely beneficial for the country which is further used to enhance infrastructure, tourism in our country that simultaneously boosts employment. Henceforth, the government is unlikely to enact any changes to the capital gains taxes.

Read here: Interim Budget 2024: Trading strategy by CNI Research

Which sectors are in focus in this budget?

Power Sector: Talking about power sector, 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.

Furthermore, investments in grid modernisation, energy storage solutions, and smart grid technologies are expected to improve grid stability and integrate renewable energy sources effectively. Also, the government’s continuous focus on promoting city gas distribution (CGD) projects to increase the usage of natural gas, a cleaner fossil fuel alternative.

Infrastructure: Continued investment in infrastructure development, including roads, highways, railways, airports, and ports, increased allocation for renewable energy projects, tax breaks for investments in green technologies, and policy support for building energy storage infrastructure. This is seen as crucial for boosting economic growth, creating job opportunities and boosting the youth of the country.

Read here: Budget 2024: From CCT to GST issue, here are commodity market demands

Electric Vehicles (EV): 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.

2024 is likely to remain a volatile year. What budget announcements can help reduce some pressure on the markets?

India's budget needs a delicate balancing act. Firstly, boosting domestic demand is crucial. Increased infrastructure spending, targeted tax cuts for essential sectors, and subsidies for weak populations can inject much-needed cash into the system and accelerate consumption. Moreover, it will generate jobs, and attract fresh investments. This not only strengthens economic fundamentals but also paints a picture of a proactive government, enhancing sentiment. This counters external uncertainties and fuels internal growth.

Read here: Budget 2024: What is ‘Halwa ceremony’? Why is it so important?

Secondly, prioritising fiscal prudence is vital. Controlling government spending, streamlining subsidies, and exploring alternative revenue sources like asset monetisation can boost confidence in investors. Maintaining fiscal discipline avoids excessive borrowing and strengthens India's economic resilience in the face of global headwinds.

How can the budget help boost the manufacturing sector?

Today, After China, India has all the capabilities to become the manufacturing hub in the world. Major global investors have their eyes on India today for setting up their plants in our country. The manufacturing sector is considered to be extremely important and plays a huge role in the growth of any country.

Henceforth, budget reforms promoting the sector are extremely crucial. Implementing tax incentives, providing special economic zones, and giving financial benefits to investors would attract many global conglomerates to become a part of our country and act as a catalyst in the progression of our economy. Higher investments would ensure job creation, many individuals would be employed, would also help combat inflation in our country, and would ensure India emerging as a superpower in the coming times.

Read here: Axis Securities lists three expectations from Interim Budget 2024; details here

Budget reforms in the manufacturing sector 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. Today we are highly dependent on countries like China and Taiwan for our semiconductor needs and thus budget reforms must introduce new PLI schemes and support such sectors in order to get these facilities in-house, reduce dependency, and make us ‘Aatma Nirbhar’.

Do you expect the RBI to cut rate in Feb post the budget?

The RBI is expected to cut rates in the month of February. The following could be taken considering global rate cuts plus more money being pumped into the market for the overall growth of the economy. Cutting the rates would ensure higher yields favourable returns for investors in various products like long-term duration funds alongside government securities and bonds.

Read here: Budget 2024: How FM Sitharaman can make the new income tax regime attractive?

 

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.