In the ever-evolving world of finance, staying informed about the latest budget is crucial for individuals, businesses, and the economy at large. The Budget 2024, recently unveiled by the government, is no exception. This article aims to provide you with a detailed breakdown of the key aspects of Budget 2024 in simple, human language. To make it even more accessible, we’ll present much of the information in table form for easy reference.
Overview of Budget 2024:
- Total Budget Allocation: This section provides an overall figure for the budget, indicating the total amount allocated by the government for various sectors and initiatives.
- Key Economic Indicators: Highlights essential economic metrics, such as GDP growth projections, inflation targets, and other indicators that give insight into the country’s economic health.
Income Tax Reforms:
- Changes in Tax Slabs: Discusses any alterations in the income tax slabs, specifying how these changes may impact individual taxpayers.
- Deductions and Exemptions: Details any modifications or new provisions related to tax deductions and exemptions for individuals and businesses.
Infrastructure Development:
- Allocation for Roads and Highways: Outlines the budget earmarked for the construction and maintenance of roads and highways, vital for transportation and economic connectivity.
- Investment in Public Transportation: Highlights funds dedicated to enhancing public transportation systems, fostering accessibility and reducing congestion.
Healthcare Sector:
- Budget for Healthcare: Provides information on the financial commitment towards healthcare, covering areas such as hospitals, medical research, and public health programs.
- Initiatives for Pandemic Preparedness: Discusses any specific measures or funding aimed at bolstering the country’s ability to handle health crises, such as pandemics.
Education Initiatives:
- Funding for Education: Details the budget allocation for the education sector, encompassing schools, colleges, and universities.
- Skill Development Programs: Explores initiatives and funding dedicated to enhancing skill development and vocational training, contributing to a skilled workforce.
Agriculture Sector:
- Allocation for Farmers: Sheds light on the budget set aside for supporting farmers, including subsidies, agricultural research, and development programs.
- Irrigation and Rural Development: Addresses funds allocated for improving irrigation facilities and overall rural development in the agricultural landscape.
Technology and Innovation:
- Investment in Research and Development: Highlights the financial commitment to research and development, fostering innovation and technological advancements.
- Digital Infrastructure: Discusses budget provisions for improving digital infrastructure, including internet connectivity and technology adoption.
Social Welfare Programs:
- Budget for Social Security: Provides information on funds allocated for social security programs, including pensions, unemployment benefits, and welfare schemes.
- Poverty Alleviation Initiatives: Explores budgetary measures aimed at reducing poverty through targeted social and economic programs.
Environmental Sustainability:
- Funding for Green Projects: Outlines the budget dedicated to environmentally friendly projects and initiatives, such as renewable energy and conservation programs.
- Renewable Energy Initiatives: Explores specific allocations for promoting and implementing renewable energy sources.
Defense and Security:
Defense Budget Allocation: Details the budgetary provisions for the country’s defense forces, covering areas like defense modernization, personnel, and equipment.
Modernization Initiatives: Discusses any specific plans or funding directed towards modernizing the defense infrastructure and capabilities.
Trade and Commerce:
Policies for Economic Growth: Explores budgetary measures and policies aimed at fostering economic growth, including trade agreements and export-import strategies.
International Trade Agreements: Highlights any new or revised trade agreements and partnerships with other nations.
Job Creation Initiatives:
Funding for Employment Generation: Details the budget dedicated to initiatives promoting job creation, including support for industries and entrepreneurship.
Support for Small and Medium Enterprises (SMEs): Discusses specific measures and funding aimed at bolstering the growth and sustainability of small and medium-sized enterprises.
Budget 2024 unfolds as a comprehensive financial roadmap, aiming to address diverse aspects of the economy. From tax reforms to infrastructure development, the budget encompasses initiatives that touch the lives of every citizen. This guide, presented in an easy-to-read table format, serves as your go-to resource for understanding the intricate details of Budget 2024. Stay informed, stay empowered.
In the context of an impending election, the interim budget for 2024 was a wise one that avoided any populist measures and achieved a high degree of fiscal discipline without sacrificing high-quality capital expenditure.
Our belief is that monetary policy has carried most of the burden in managing the economy thus far, and it’s now time for the fiscal side to take over and work on narrowing the deficit gap. The finance minister clearly outlined the intent towards fiscal prudence by announcing the fiscal deficit target for FY25 at 5.1% as opposed to the market expectation of 5.3%. Taking a step forward, the finance minister further stressed that the FY26 target is penciled in lower than 4.5%, which is a welcome move by the Government.
The numbers, even when looking at capital expenditure (capex), are encouraging. The capital expenditure outlay for 2024–25, allocated at ₹11.11 lakh crore, is 17% more than the revised capex estimate of ₹9.5 lakh crore for 2023–24. The upcycle of the central government’s capex spend has led to a significant buildup of infrastructure throughout the nation and has multiplied effects on various sectors of the economy.
The Equity Market
The budget impact on the equity market is anticipated to be zero. Election years have historically resulted in more market volatility. Based on present valuations, 2024 appears to be the most expensive election (in terms of value) of the previous five election years.
Among the various market capitalizations, we continue to believe large-cap stocks provide a better margin of safety as compared to mid- and small-caps. However, one must be mindful that most of the positives are already factored in the price at current valuations, which warrants an investment approach in hybrid and multi-asset allocation schemes which can dynamically manage exposure to various asset classes.
Investors who want to add equity should concentrate on offerings like large-cap funds, flexi-cap, or hybrid category funds; in these types of schemes, the fund manager can decide where to invest based on what seems most attractive across market capitalizations and sectors. Current investors can stay invested as long as India’s long-term story holds true.
Industry Take
Financials, insurance, and consumer staples are some of the appealing niches. Contrarianly, we are thinking about a couple of the consumer staple companies. We are still bullish on sectors like auto, cement, and telecom.
Debt Management
A lower fiscal deficit leading to a lower borrowing program and passive flows in the coming months due to global bond inclusion bodes well for the bond market in the short term. The interim budget demonstrated the government’s overarching focus on maintaining macro stability. Additionally, fiscal impulse needs to be counter-cyclical in nature. Given the strong growth that the economy is experiencing at the moment, the government’s approach towards fiscal prudence would help in avoiding overheating of the economy.
We think that high-quality spending will keep growth robust, which could lead to the RBI keeping its neutral position.
Given the adverse global conditions and limited likelihood of rate reduction, we think duration in this environment needs to be played carefully and that active duration management is the way to navigate fixed-income markets going forward.