Finance Minister Nirmala Sitharaman is all set to table the Union Budget in just about a week’s time. While every user group and stakeholder have their wishlist ready, sizeable cut in income tax rates is one of the most talked about topic. Given the BJP’s performance in the election and realities of balancing expectation of coalition partners, the popular views is that this will be a pro-People Budget aimed primarily to woo the angry middle-class. Schemes that are set to boost the rural economy may also see significant expansion.
Earlier, the finance minister held a series of pre-Budget consultation meetings with industry representatives and economists. Prime Minister Narendra Modi too held a high-level meeting with economists to gather suggestions on expectations from the Union Budget.
While the Union Budget will be presented on July 23, the annual economic survey will precede the Budget speech and will be released on July 22. The interim Budget was presented on February 1. This is the first Budget of the NDA 3.0 government and Nirmala Sitharaman’s seventh consecutive.
Dr Sangita Reddy, Joint Managing Director, Apollo Hospitals Group, said, “We are hopeful that the government will continue to prioritize the healthcare sector.”
The interim budget 2024-25 in February emphasized preventive care, women’s health, infrastructure expansion, and child development, marking significant strides towards a healthier future. Dr Sangita Reddy anticipates the upcoming budget to maintain and strengthen this approach. “The promotion of cervical cancer prevention by vaccination for girls aged 9-14 was one of the major announcements, and it represents a significant step toward improving women’s health. We hope the government will keep on supporting these programs. Furthermore, initiatives under programs like U-Win and Mission Indradhanush should be encouraged. Strengthening infrastructure is crucial to effectively enhance health services in rural and remote regions, ensuring equitable access to health care. Increased support is expected from the government to achieve this goal,” she said.
JM Financial, in a report, stated that the government is expected to strike a balance between fiscal deficit, capex for growth and social spending, in the upcoming Budget. “The continuation of existing capex agenda (infrastructure, railways, defence, renewable/clean energy), higher budgetary allocation to revive rural economy, job creation and roadmap for ‘Viksit Bharat’ by 2047 would be the key themes for the Union Budget 2024-25. Markets would be keenly awaiting any adverse changes in the capital gain tax on equities. In case there is no change in capital gain tax it would be considered positive for Indian equity markets,” it said.
Further, it added that the government is likely to continue its capex plan of Rs 11.1 lakh crore for FY25 as announced in the interim budget with the aim to keep fiscal deficit target unchanged at 5.1 per cent of GDP with aim to reach 4.5 per cent of GDP in FY26E.
“The record dividend of Rs 2.11 lakh crore received by the government from RBI would provide headroom to spend on welfare measures to revive rural economy with higher spending on government programmes like the Pradhan Mantri Awas Yojana and PM Kisan. Likely government welfare schemes and recent moderation in the inflation bodes well for recovery in the rural economy,” it said.
Foreign investors injected Rs 15,352 crore into Indian equities during the first half of July, on hopes of reform focus by the government, low US Fed rates and a healthy domestic demand. Data revealed that foreign portfolio investors (FPIs) made a net inflow of Rs 15,352 crore into equities by July 12. This follows a substantial inflow of Rs 26,565 crore in June.
India’s wholesale price index (WPI)-based inflation for the month of June accelerated to a 16-month high of 3.36 per cent primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc. Shreya Sodhani, Regional Economist, Barclays, said that while the rate cut cycle is expected to start from December 2024, if growth remains onm a strong footing or if the inflation surge is stronger than expected by the bank, there is a risk of it being pushed to 2025. “Both wholesale and retail price indices are overwhelmingly being driven by food. CPI inflation crossing the 5% mark in June was largely due to elevated food inflation. While industrial costs are rising, the impact of this is not yet fully reflected in core CPI inflation (core CPI inflation rose marginally to 3.1% in June from~3% in May). The central bank is likely to remain hawkish over persistently elevated food inflation,” she said.
Shivam Dixit, Co-Founder and CEO of Counsel India, said that the government has a critical chance to invest significantly in the healthcare industry, especially in mental health, through the Union Budget 2024. “Priority should be given to boosting financing for mental health care. This entails providing funding for the education and employment of mental health specialists and increasing accessibility to mental health facilities in both urban and rural locations. Public-private partnerships can also stimulate innovation and raise the standard of mental health services. The government ought to think about offering tax breaks to businesses that help their staff members with their mental health. These steps help improve mental wellness among employees and foster a more encouraging work atmosphere,” he said.
Akshat Seth, Managing Director and CEO, HIL Ltd, said that the government, despite fiscal challenges, has remained committed to infrastructure spending, allocating Rs 11.1 lakh crore in the Interim Budget for 2024-25, up 11% from the previous year. “This continued focus on infrastructure and productivity-oriented capacity has had a significant multiplier effect on economic growth and employment generation. Considering the success of recent years, we expect the Government to sustain the push towards investments in housing, highways, and rail corridors. This will augment long-term income growth and sustain demand for home and building materials in the country and also promote innovation in the industry. We strongly believe this will catalyze advancements in construction materials, sustainable practices, and employment generation,” he said. In the budget for 2023-24, the capital expenditure outlay of Rs 10 lakh crore was nearly three times the outlay in 2019-20.
While maintaining that the Budget 2024 will signal policy continuity, showcasing fiscal consolidation, Barclays stated that there will be a marginal shift in spending mix on the back of a high dividend of Rs 2.1 lakh crore announced by the RBI and also increased tax collection. Shreya Sodhani, Regional Economist, Barclays, said, “While maintaining focus on capex, we think the government will use increased receipts to fund higher revenue spending, balancing economic and political needs.”
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