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Budget 2023: Which sectors will gain, which won’t

Budget 2023: Infrastructure, construction, and building material firms stand to benefit from a strong rise in budgeted outlay for infrastructure for the second year in a row

Union Budget 2023, Budget 2023
On both these fronts, the Centre and the states need to significantly step up their commitment.

By Sujan Hajra

Without a lot of fanfare, the budget did a decent job of striking a balance between opposing goals, such as promoting investment-led growth while also consolidating the budgetary position of the government. We anticipate that businesses involved in infrastructure, construction, the provision of building materials, and hospitality will reap the greatest benefits.

The Union Budget is released at a time when the economy around the world is slowing down. India is a shining example of hope since, in comparison to counterparts, the country has the highest growth and one of the lowest inflation rates. The budget has struck a compromise between competing goals, such as encouraging growth while maintaining fiscal consolidation, reducing the burden on taxpayers while bringing in robust revenue growth, and giving preference to investment while not discouraging consumer spending. The primary focus of the budget was on maintaining India’s position at the top of the global economic order.

Infrastructure, construction, and building material firms stand to benefit from a strong rise in budgeted outlay for infrastructure for the second year in a row, as well as from a continued emphasis on affordable housing. Certain makers of durable goods, such as air conditioners, as well as manufacturers of wire and cable are set to benefit. Certain long-lasting goods and home appliances could benefit from restructured customs duties (e.g., LED bulb, TVs, chimneys). The emphasis placed on tourism is a significant boon for the hospitality industry.

Key positives for the automobile sector include substantial funds being allocated as part of the green hydrogen mission, viability gap funding for the energy storage industry, and scrappage programmes for older vehicles by governments. Important factors include increased funding under the PLI scheme as well as increased support for the adoption of hybrid and electric vehicles. In order to encourage more production within the country, customs taxes have been reduced. We anticipate a beneficial impact on M&H CV manufacturers in the relatively short future.

Banks, housing businesses, and microfinance institutions (MFIs) would all benefit from large capital outlays, an emphasis on housing as part of the PMAY, income tax relief, and the continuation of guaranteed loans to MSME. However, measures relating to high-value real estate, the taxation of income from life insurance could be detrimental for life insurers.

The general measures including income tax relief would be beneficial for consumer-focused industries like fast-moving consumer goods, consumer electronics, and consumer retail. Various support extended by the budget to the rural economy would also benefit these segments. The increased tax on cigarettes is quite insignificant, and it is very probable that it will be readily passed on to customers, which will be beneficial for these businesses. It’s possible that jewellery makers’ profit margins will be affected by the emphesis on lab-grown diamonds.

We do not anticipate a significant direct impact from the budget on industries such as chemicals, information technology, oil and gas, and pharmaceuticals. The housing market is a mixed bag, with some benefits, such as affordable housing, and others ranging from negative to neutral.

Our top recommendations based purely on the budget measures (in alphabetical order) are the following: Amber Enterprises, Ashok LL, Indian Hotels, ITD Cementation, ITC, KNR Constructions, NCC, PNC Infratech, Tata Motors, and Ultratech.

(Sujan Hajra – Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)

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First published on: 03-02-2023 at 11:19 IST