Budget 2024 Expectations Highlights: With general elections looming, how will Interim Budget shape the fiscal landscape for the year ahead?

– The government needs to continue with favourable policies to promote green mobility while also focussing on infrastructure development at a robust pace in the upcoming Budget, according to some leading firms in the automobile space

– The sector anticipates a focus on policy stability, along with a sustained emphasis on promoting investment and infrastructure development

– The luxury car industry is seeking a streamlined duty structure and priority attention to GST

CII in its pre-budget 2024 note said, “To enhance quality and productivity in manufacturing, launch a National Mission for Advanced Manufacturing. The Mission should strengthen the ecosystem for building a technologically advanced manufacturing industry and accelerate the adoption of transformative technologies in manufacturing sector the Mission should also work towards building a digitally skilled workforce capable of keeping up with evolving technologies. It should collaborate with international institutions and companies for knowledge exchange and technology transfer.”

The growth rate of the combined revenue receipts of the 16 largest states decreased by nearly 80 per cent to 5 per cent during the April-November period in the current fiscal year, a report by ICRA Ratings revealed. This growth stands against the budgeted 17.4 per cent target for the 2023-24 fiscal year.

Aditi Balbir, Co-founder, EcoRatings:

The 2024 budget should prioritize sustainability in the infrastructure and energy sectors. Emphasizing sustainable agriculture and striving for net zero targets are also key focal points. We also expect measures including incentivizing sustainability in the retail sector, extending industry status recognition, and encouraging the adoption of Environmental, Social, and Governance (ESG) ratings across various sectors beyond securities and banks. To reinforce the link between sustainability and financial benefits, the budget should introduce substantial incentives, such as lower interest rates for ESG loans and grants for companies compliant with ESG standards. This approach will establish a direct correlation between sustainability efforts and financial advantages. Furthermore, the budget should also envision the mandatory adoption of comprehensive compliances, such as the Business Responsibility and Sustainability Report (BRSR), for all companies. Additionally, the introduction of product-level ratings to enhance transparency, providing clearer insights into ESG parameters.

Udit Garg, Director, Kundan Green Energy:

It is consistently demonstrated that hydropower plants across the spectrum: storage, run-of-river, and pumped storage provide immense benefits. However, this sector faces a lot of challenges – the financing sentiment in the hydro power sector has been quite damp in the past two years with no major financial closure being reported. Then, clearances from multiple departments during the project-planning stage consumes a lot of time. Uncertainty over the public acceptance of the project’s socio-environmental impacts; water sharing disputes; Environmental Impact Assessment issues; geological surprises; underdeveloped project location with lack of basic infrastructure and communication networks; power evacuation issues; and lack of skilled contractors/workforce are some of the other challenges faced by Hydropower sector.

Keeping all these issues in consideration, I would like to recommend a few measures before the budget announcement this year. The Government may like to consider the need for central and state government’s cooperation to actively work towards hydropower promotion -the states’ water-sharing agreements should include hydropower development agenda; government’s cooperation in developing basic infrastructure as well as power evacuation infrastructure. Moreover, establishment of a nodal agency/ institution dedicated to hydropower development could be announced during the budget; Central and state governments could help in creating public awareness programs to highlight the importance of hydropower projects so that it minimizes the social barriers. The pumped storage hydropower plants can be incentivized for maintaining grid stability through the ancillary services and by acting as a water battery to support grid integration of intermittent renewables such as solar and wind.

Probal Ghosal, Executive Chairman, Ujala Cygnus Group of Hospitals

Anticipating the upcoming budget, we expect the Government to increase budget allocation on health to 2.5% of the GDP, besides the focus on elevating healthcare in Bharat and Rural India. In addition, we expect a rationalization of the GST framework and a reinforced healthcare value chain. One of the most important features of GST is to boost the competitiveness of businesses by ensuring the free flow of input tax credits across the value chain. However, we would expect further GST rationalization for the availability of input credit. Apart from that, it is imperative to prioritize capacity building and the training of healthcare professionals to effectively address the escalating demands within our nation. We also expect the budget to touch on certain key aspects like enhancing healthcare infrastructure in Tier 2 and 3 cities by granting it infrastructure status for private sector investment and ensuring low-cost funding and tax benefits. Apart from that, there is a need to emphasize sustained liquidity incentives, particularly for Rural India’s emergency healthcare. Encouraging private investment in medical colleges through measures like land allotment, subsidies, and loan moratoriums is expected as well. There is a need for mandating doctor rotations and incentivizing specialists in Tier 2 and 3 cities as well to aim for equitable medical expertise distribution. We also propose budgetary allocation for primary care, higher tax exemptions, and Primary Health Centre (PHC) expansion via public-private partnerships (PPPs). In digital infrastructure, the integration of government schemes under the National Health Authority is recommended for a unified digital platform, enhancing efficiency and expediting payments for private healthcare providers. Overall, we advocate a comprehensive approach, addressing infrastructure, manpower, patient support, and digitalization for a resilient and accessible healthcare system.

A Vote on Account represents an estimated expenditure covering the necessary costs before a new government assumes office. Similar to the fiscal document present in a typical budget year, it requires approval from the majority in Parliament. Unlike a full Budget that provides comprehensive details of expenditures, receipts, tax changes, and government policies, a Vote on Account is an interim authorization solely for spending.

Despite the common tendency to use the terms interchangeably, there are fundamental distinctions between the interim Budget and Vote on Account. Notably, a Vote on Account lacks the capacity to influence the tax regime, whereas the interim Budget holds the authority to make changes. Additionally, while an interim Budget encompasses both expenditures and receipts, a Vote on Account solely outlines the government’s expenditure.

In the upcoming interim Budget on February 1, the government may unveil its strategy to enhance pension benefits for its employees, operating within the broader framework of the National Pension System (NPS). Sources suggest that the plan may incorporate a cautiously designed guarantee component, aiming to avoid any unsustainable fiscal burden, a report by Financial Express said. Earlier this year, the government established a committee, chaired by Finance Secretary TV Somanathan in March, to propose methods for augmenting pension benefits under NPS for government employees without reverting to the fiscally challenging old pension system (OPS). With the committee formed during the budget session, the finance minister is anticipated to provide an update on its progress in the February budget speech. Given that it will be an interim budget, the government is likely to implement necessary changes to the NPS in the regular budget scheduled for July.

The Budget presentation commences with a pivotal speech delivered by the finance minister, constituting a crucial aspect of the Budget documents, although it forms only a fraction of them.

This speech can be dissected into two main segments. Part A unveils planned initiatives for diverse sectors of the economy, encompassing health, education, services, banking, financial services, rural and urban sectors, capital markets, SMEs, MSMEs, large businesses, and infrastructure development, among others. Additionally, it outlines welfare schemes designed for targeted groups such as women, farmers, and students. Part A also addresses Budgetary targets like fiscal deficit, divestment, and government borrowings.

Part B of the Budget document, on the other hand, encompasses announcements related to direct and indirect taxes (excluding GST). It includes information on alterations in income tax slabs, corporate tax, capital gains tax, customs, and excise duties anticipated in the upcoming fiscal year. Following Part B, the annex provides a concise summary of the tax declarations and the budgeted expenditure on various schemes, programs, and ministries.

It is noteworthy that, for the past two years, the annex has detailed the extent to which the Budget is funded through extra-Budgetary resources, in addition to tax and non-tax revenue and the borrowing program.

Chakravarthi C. Quantum Energy, A leading EV– Two Wheeler Manufacturer:

“In anticipation of the upcoming budget, the Electric Vehicle (EV) industry in India is fervently advocating for crucial measures to sustain and enhance the sector’s growth. With the imminent expiration of the FAME II subsidy program in March 2024, there is a collective call from stakeholders to extend it, ensuring ongoing efforts to enhance the affordability and accessibility of electric vehicles for consumers. Extending the program would not only solidify support for the EV industry but also align with the government’s ambitious target of achieving 30% electric vehicles on Indian roads by 2030. Complementing this extension, the industry is hopeful for a significant reduction in the GST on lithium-ion battery packs and cells from 18% to 5%. Such a revision would substantially alleviate manufacturing costs, enabling manufacturers to offer EVs at more competitive prices, further encouraging consumer adoption. Additionally, stakeholders are seeking a standardized policy for the battery-swapping market. The current fragmentation and varied battery types across different players have led to compatibility challenges and safety concerns, including incidents of fires at swapping stations due to inferior batteries. A standardized policy specifying the type of battery pack, cell, dimensions, and connectors is expected to enhance safety and streamline charging infrastructure, fostering a more reliable and secure environment for EV users.”

An interim budget is presented by a government undergoing a transition period or entering its final year in office before the upcoming general elections held every five years. In the election year, the incumbent government is restricted from presenting a comprehensive Union Budget. Instead, the finance minister delivers an interim budget during the joint sitting of Rajya Sabha and Lok Sabha in Parliament.

The interim budget provides a detailed breakdown of anticipated expenses and projected revenue through taxes for the upcoming months leading to the elections. In presenting this budget, the incumbent government seeks parliamentary approval to access funds from the consolidated fund of India, where all government revenue is pooled. This funding is crucial for meeting budgetary requirements before the conclusion of the financial year.

Beyond outlining revenue and expenditure estimates, the interim budget also incorporates specific policy measures. In recent times, interim budgets have served as a strategic tool for incumbent governments to highlight their accomplishments, aiming to garner support from voters as they approach the elections.

“As team InfoVision eagerly awaits Budget 2024, we highlight AI’s potential to multiply business efficiencies by up to 10X. We call on the government to bolster AI investments, supporting advancements in quantum computing, social digital innovation, and Explainable AI (XAI). Crucial to this effort is the upskilling of our workforce and the reform of data governance laws to boost data center investments and enable wider AI/ML adoption. AI’s integration into sectors like urban planning, healthcare, and education will be pivotal. A collaborative governance model ensuring ethical data use is key to driving India towards a $5 trillion economy.” says Shreeranganath Kulkarni, Managing Director InfoVision.

Dr. Somdutta singh, Serial Entrepreneur, Founder and CEO Assiduus Global Inc, LP Angel Investor, Advisor Govt of India:

I am anticipating that this budget might endorse the implementation of the ‘Open Network for Digital Commerce’ (ONDC) initiative. This initiative can empower MSMEs to access various e-commerce platforms without encountering entry barriers, benefiting from standardized data and processes. The adoption of e-commerce by MSMEs will facilitate their entry into both domestic and international markets, contributing to economic growth. Allocating budgetary resources to enable MSMEs to integrate e-commerce platforms into their business strategies will foster sustainable development. Additionally, ONDC will play a pivotal role in shaping the MSME ecosystem, aiding suppliers in reaching a broader customer base and leveraging diverse logistics for accelerated growth.

Puneet Arora, Managing Partner, Biz Staffing Comrade Pvt Ltd:

We expect measures from the upcoming Budget 2024, mostly about employee welfare and taxation, the employment process, formal job creation opportunities, reducing compliance complexity, roll out of labour codes making them more adaptable to the modern workplace and addressing the skill-gap challenge in the country. The staffing industry plays a critical role in opening up employment opportunities, helping the organisation to build their business, developing a talent pipeline and thus fueling economic growth. Hence this industry deserves to be given an industry status. The HR landscape has also witnessed profound transformations in recent years from being a standalone function to becoming a strategic business partner. There has been a fundamental shift in repositioning HR to drive business transformations and it will strengthen its hold in the near future as well.

As skilling in the new and emerging technologies becomes the need of the hour for various industries, we expect the Union Budget 2024 to allocate more funds into a structured and comprehensive skilling programme. With the employment landscape evolving quickly, bringing in fundamental changes to the skilling system are necessary. The financial outlay must increase to stay up with the rate of technological advancement and the people’s ability to learn new skills. Simultaneously, encouraging deductions for training courses will promote professional development and lifelong learning, enhancing individual career growth and overall workforce competitiveness.”

Rahul M Mishra, Director and Co-Founder of PolicyEnsure:

“Insurance sector experts are urging the budget to bring about significant changes to taxation, regulatory measures, and technology. They seek tax benefits for life insurance products, emphasizing relaxation in tax deductibility limits for premiums, particularly for term plans. A reduction in the GST rate on insurance premiums is desired to enhance affordability and accessibility. Additionally, experts are calling for the elimination of taxation on annuity returns to make them more attractive. Regulatory expectations involve easing minimum capital requirements for new insurers, introducing a composite license, and focusing on microinsurance for low-income groups. In the technology realm, support for InsurTech startups and a focus on cybersecurity are requested to foster innovation and protect against cyber threats. These measures collectively aim to make insurance more widespread, innovative, and financially inclusive.

The insurance sector anticipates regulatory flexibility in the upcoming budget, seeking a dilution of stringent laws to encourage market growth and innovation. Easing minimum capital requirements for new insurers is emphasized, aiming to remove barriers hindering new entrants and stimulating competition. The introduction of a composite license is proposed to streamline operations and reduce costs for insurance companies. This indicates a desire for regulatory measures that facilitate a more dynamic and efficient industry. Furthermore, support for InsurTech startups and a focus on cybersecurity demonstrate a need for a regulatory environment that encourages technological advancements while ensuring the security of sensitive data. Overall, these expectations align with a vision of a regulatory framework that balances innovation with risk management in the insurance sector.”

Sonali Chowdhry – CEO, Officenet:

“As we approach the Union Budget 2024, we acknowledge the government’s recent efforts to streamline PF processes and the noteworthy change in last year’s IT regime. In the upcoming budget, we advocate for policies that aim to reduce compliance complexity and foster talent development, recognizing their pivotal role in shaping our collective future. As we navigate the path towards AI dominance, a key expectation is robust support for Reskilling/Upskilling initiatives to empower our workforce for the challenges of tomorrow.

In the realm of the manufacturing industry, we anticipate the necessary change in the Employee State Insurance (ESI) schemes. The current structures pose administrative challenges, leading to delayed contributions and settlements. A comprehensive reform to simplify these processes could significantly enhance operational efficiency in HR management. Investments in technology for HR automation and digital workforce management systems are also sought to optimize HR functions within enterprises.”

Himanshu Arya, Co-Founder & CEO of Luxury Ride:

The automotive industry is a key driver of the Indian economy, contributing significantly to GDP, employment, and exports. However, the industry faces several challenges, including high taxes, regulatory uncertainty etc. In light of these hurdles, we respectfully request the Finance Minister to address these concerns during the upcoming Union Budget. Through targeted interventions and policy refinements, the government can foster a more conducive environment for the sector to thrive, enabling it to continue fueling economic progress and generating employment opportunities while bolstering India‘s position as a global automotive hub.

“Currently Pre-owned luxury cars attract a staggering 110% GST & 100% excise duty on imported CBU units, which is a major deterrent to imports. Reducing these taxes would make imported cars more affordable and accessible to consumers and help boost domestic market competition.

The Ministry of Road Transport and Highways (MORTH) has initiated an initiative to facilitate the online transfer of ownership for pre-owned vehicles. However, the period required to transfer the ownership is very tedious. We request the government to expedite the implementation of this portal to improve transparency and confidence in the pre-owned vehicle market”

Ankit Agrawal, Founder & CEO, InsuranceDekho:

“In the upcoming budget, we anticipate that the finance minister will exempt insurance policies from GST, which will bring down insurance premiums. This step will increase insurance affordability and help fulfil Prime Minister Modi’s dream of insurance for all Indians by 2047. Additionally, we expect the government to increase the tax exemption limit under 80C, which will encourage savings, promote insurance coverage, and stimulate economic growth. Various studies have shown that increased insurance penetration has a multiplier effect on the economy by reducing overall financial distress and making long-term growth capital available to important nation-building industries”

Ajay Bhutani Founder & CEO, BarCode India:

“Anticipating the 2024 Union Budget, we at Bar Code India eagerly look forward to continued government support for the technology sector. In 2024, we aspire to further invest in research and development initiatives, foster innovation, and enhance India’s digital infrastructure. An assertive and conducive policy environment encouraging research and development across emerging software and hardware technologies like Artificial Intelligence and the Internet of Things will drive India towards a tech-driven future. Furthermore, incentivising domestic manufacturing and investments in PSU digitization with Made-In-India technologies will strengthen and catalyze Indian technology companies. As we navigate the dynamic tech landscape, we trust the government’s commitment to fostering growth in the technology sector, ultimately contributing to the nation’s economic prosperity”.

Aditya Joshi, MD & CEO at OpalForce:

“OpalForce anticipates a forward-looking budget that recognizes the pivotal role of the IT industry in shaping India‘s technological landscape. We expect the government to implement strategic measures, aligning with the dynamic needs of the sector. Emphasizing the importance of upskilling, we look forward to initiatives aimed at enhancing the proficiency of the existing workforce, especially in cutting-edge areas like AI. Additionally, we hope for targeted incentives for research and development, fostering innovation and competitiveness. Drawing inspiration from successful models like the Production Linked Incentive (PLI) scheme in the manufacturing sector, we encourage the government to introduce AI-focused initiatives. A well-crafted budget reflecting these technological imperatives will undoubtedly fuel the growth of the IT industry, positioning India as a global tech leader”.

Nital Shah, Founder & COO at Uplers:

“We expect to see a further thrust towards new technologies like Artificial Intelligence (AI), Machine Learning (ML), and Data Science. Bolstering Research & Development in these areas to drive innovation, creating an enabling environment for tech-driven initiatives, and further momentum for start-up India, is to be expected. Focus on initiatives like skill India, tech-based upskilling and reskilling can aid hiring and job creation. The link between economic growth and technological advancement is irrefutable, and we look forward to a budget that propels our nation further into a digital first future.”

Balaji Viswanathan, MD & CEO at Expleo India:

“As we anticipate the 2024 Union Budget, the technology sector is poised for transformative growth and aligns with the industry‘s vision for a digitally empowered future. We suggest policymakers prioritize investments in cutting-edge technologies, foster innovation hubs, nurture research and developments, strengthen skill expansion, and enhance digital infrastructure. A forward-looking budget will incentivize the ecosystem to forge partnerships and invest in emerging technologies like AI, blockchain, and 5G. Besides, we look forward to strategic measures to attract global tech investments, driving economic competitiveness. By aligning fiscal policies with the evolving tech landscape, India can truly position itself as a global technology leader, unlocking immense potential for innovation, job creation, and sustainable economic development.”

Sarvagya Mishra, Co-founder & Director at SuperBot

As we stand at the crossroads of innovation with Union Budget 2024 on the horizon, our anticipation at SuperBot goes beyond fiscal measures. We envision a budget that transcends traditional boundaries, streamlining Ease of Investing, catalyzing a robust Startup Funding Scenario, and laying the foundation for profound Digital Transformation within the startup landscape. We look to this budget not just for resource allocation but as a strategic path towards a future where Artificial Intelligence (AI) seamlessly integrates into our startup ecosystem. We anticipate targeted initiatives that propel AI research, development, and adoption, fostering innovation and ensuring global competitiveness.

Atul Gupta- Co-founder & Director at e-Sprinto:

We at e-Sprinto eagerly anticipate Union Budget 2024, recognizing the undeniable surge in electric vehicle (EV) demand in India. With EV sales doubling from 2022 to 2023, reaching 89,137 units, the momentum is clear. To complement this growth, we urge a reduction in GST on lithium-ion battery packs and cells from 18% to 5%. Such a move will incentivize OEMs, fostering innovation and affordability in the sector. Additionally, the continuation of the FAME II Subsidy beyond its March 2024 expiration is crucial to sustain customer acceptance and support OEMs. Moreover, compulsory adoption of global ISO norms for battery swapping should be mandated by integrating voluntary IS standards into the Central Motor Vehicle Rules. This step will ensure quality assurance and uniformity in the EV industry, elevating standards for all stakeholders involved in the electric vehicle ecosystem. A forward-looking budget will not only propel the EV revolution but also solidify India’s position as a leader in sustainable mobility.

Sumit, CEO and Co-founder at DashLoc:

As we eagerly await the Finance Budget 2024, DashLoc envisions a budget that champions startups, fostering Artificial Intelligence (AI) research and innovation for resource generation and employment opportunities. Expecting initiatives promoting tailored upskilling programs in AI, we look forward to partnerships between educational institutions and the industry, ensuring a steady pipeline of skilled professionals for the tech sector. In India’s retail-dominated market, the government’s ONDC platform is set to transform purchasing patterns over the next five years. Finance Budget 2024 therefore also presents an opportunity to enhance innovation and community-centric solutions, strengthening the role of startups like ours in reshaping hyperlocal discovery with a keen emphasis on personalization and precision.

Alok Kashyap, Founder and CEO at Yatiken Software Solutions:

At Yatiken Software Solutions, our expectations for Union Budget 2024 align with key areas crucial for the IT sector’s growth. We look forward to potential allocations for EV infrastructure development, presenting exciting opportunities in software for EV systems, IoT integration for smart charging, and data analytics for EV performance optimization. Additionally, we hope for a significant GST relaxation for the service sector, leading to a reduction in the 18% GST rate. This move would alleviate operational costs for IT firms, enhancing global competitiveness and providing resources for further innovation and talent development. Besides that, initiatives for upskilling programs in emerging technologies such as AI, blockchain, and cybersecurity are critical for the continuous growth of the tech industry. Collaborative efforts between educational institutions and industry partnerships can ensure a skilled workforce. Likewise, the establishment of tech-focused Special Economic Zones (SEZs) holds promise, offering tax benefits and infrastructure support to attract foreign investments and foster innovation in the IT sector. Moreover, investments in internet adoption and 5G deployment, especially in healthcare, could create opportunities for developing applications in telemedicine, remote monitoring, and data-driven healthcare solutions. These expectations, if addressed in the Union Budget, have the potential to remarkably shape the trajectory of the IT sector by fostering innovation, supporting infrastructure development, and enhancing skills in emerging technologies.

Kajal Malik, Co-founder and CBO at PickMyWork:

At PickMyWork, we are excited about the upcoming Budget 2024 and hope it will have policies that support the gig economy. Gig platforms do well when there is financial support available, which is crucial for companies like ours to grow and come up with new ideas. We believe that focusing on improving cash flow for small businesses will make our economy stronger and help platforms like ours succeed. We also think it’s important for the government to continue its commitment to digital transformation. We expect them to take steps that make it easier for technology to be integrated seamlessly, which will help our gig workers and digital companies adapt to the changing landscape. Overall, we want policies that encourage economic growth and support the ambitions of our young workforce.

Amit Vasistha, Founder and CEO, GALF, a wellness-tech platform for corporates:

“India is taking the lead in the global economic resurgence, with MSMEs and startups playing an increasingly vital role in sustaining and propelling this growth. Past initiatives connected to Startup India and MSME development are yielding positive initial results. However, the scaling process and obstacles related to institutional funding continue to impede rapid progress. The tax environment, particularly burdensome for younger firms, is often perceived more as tax terrorism than a convenience. To foster the growth of startups and MSMEs, steps should include establishing uniform state-level programs aligned with central government objectives, avoiding duplication of paperwork and certifications between central and state levels. Providing clear preference and reservation for startups in government contracts and tenders up to 20 crores can significantly boost the local ecosystem. Additionally, offering a total GST waiver for companies with sales up to Rs 2 crores and increasing spending to develop an ecosystem rewarding institutions investing or buying services from startups with up to 20 crores in sales is crucial. Liberalizing the usage of CSR funds and providing tax concessions for direct investment in impact-driven, nation-building, and ESG-linked startups further supports this initiative.”

Saurabh Uboweja,Founder and Managing Partner,BOD consulting:

“The government in all likelihood isn’t yet feeling the pressure of anti-incumbency in the upcoming general elections. This would have implications on the interim budget the Union Finance Minister will present on 1st Feb. The forthcoming budget holds the potential to chart a progressive course directing us toward the mid-term goal of creating a $5 trillion GDP by 2027-28. Fiscal discipline will be a key focus and the Finance Minister will likely resist the short-term temptations of tax cuts or extra expenditure. In my opinion, a progressive budget must address fundamental issues that are essential to the nation’s needs like job creation, global competitiveness, income equality for lower-income groups, the MSME sector, and the financial strength of major companies in core industries. These pillars serve as the foundation for an inclusive and sustainable economic landscape. Looking ahead, I also expect focused initiatives that will support and incentivise organisations in sectors such as infrastructure, startups, manufacturing, energy transition, AI & data, agriculture, and tourism. These industries are positioned to accelerate our country towards the $5 trillion GDP mark, ensuring both short-term growth and long-term competitiveness.”