Interim Budget 2024 – Key Highlights and Impact on various sector
The Present Budget has a Vision of Viksit Bharat by 2047 : Prosperous Bharat in harmony with nature, modern infrastructure and opportunities for all.
With the ‘mantra’ of ‘Sabka Saath, Sabka Vikas, and Sabka Vishwas’ and the whole of nation approach of “Sabka Prayas”, Union Finance Minister Nirmala Sitharaman presented the Interim Budget 2024 on 1st February 2024, against the backdrop of the upcoming Lok Sabha elections, marking her sixth consecutive budget presentation. She abstained from introducing populist measures, keeping tax rates for direct and indirect taxes unchanged. Offering a vision for the next five years, Sitharaman predicted an unprecedented growth, announcing a Rs 11.1 lakh crore capital expenditure for the next fiscal year, reflecting an 11 per cent increase from the current fiscal year. Notably, the government aims to reduce the fiscal deficit target to 5.1 per cent of GDP in the upcoming fiscal year, further aiming for 4.5 per cent in FY26. Given the interim nature of this budget, the comprehensive fiscal year budget will be presented after the formation of a new government post Lok Sabha Elections.
The Focus Areas of the Viksit Bharat Budget are :
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Garib Kalyan, Desh Ka Kalyan ;
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Empowering the Youth;
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Welfare of Farmers-Annadata;
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Narishakti
The Strategies for Amrit Kaal Budget 2024 are:
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Sustainable Development
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Infrastructure and Investment
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Inclusive Development
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Health
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Housing
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Tourism
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Agriculture and Food Processing
Allocation to Specific Ministries and Allocation to Major Schemes :
Here are the key highlights from Finance Minister Nirmala Sitharaman Speech:
Budget Highlights: Direct and Indirect Tax
➤ Finance Minister Nirmala Sitharaman proposes no change in direct and indirect tax including import tax
➤ Same tax rates for Direct and Indirect tax retained
➤ Tax break for start-up, investments made by Sovereign wealth funds, extended to March 31, 2025
➤ Focus on improving taxpayers service
➤ Tax reforms have widened the tax base and increased tax collections
➤ Govt to withdraw old disputed direct tax demands of up to Rs 25,000 till FY2009 and Rs 10,000 for 2010-11 to 2014-15. It will benefit 1 crore taxpayers.
➤ FM also proposes some tax benefits for pension funds
➤ Processing time of tax returns reduced from 93 days in FY14 to 10 days
➤ Tax base of GST more than doubled, says FM
➤ The number of tax filers swelled by 2.4 times, direct tax collection trebled since 2014
➤ Tax receipts for 2024-25 are projected at Rs 26.02 lakh crore
➤ Direct Tax Collections tripled in last 10 years
➤ Return filing swelled to 2.4 times.
Budget Highlights 2024: Tourism
➤ Interest-free loans to states to promote tourism
➤ Funds will be provided for development of tourism in Lakshwadweep
Budget 2024 Highlights: Air Connectivity
➤ 517 new routes to be launched under Udan Scheme
Budget Key Highlights 2024: Fiscal Announcements
➤ Capex outlay of Rs 11.11 lakh crore
➤ Capex outlay at 3.4 per cent of GDP
➤ FY24 Fiscal Deficit target revised to 5.8 per cent of GDP from 5.9 per cent.
➤ 5.1 % Fiscal Deficit target for FY 25
➤ Govt plans to reduce fiscal deficit to 4.5 per cent in 2025-26
➤ FY 25 Gross market borrowing target is Rs 14.13 lakh crore
➤ Net market borrowing seen at Rs 11.75 lakh crore
➤ Revised expenditure for FY 24 Rs 44.90 lakh crore
➤ Total revenue receipts in 2024/25 estimated at Rs 30 lakh crore vs revised estimate of Rs 26.99 lakh crore
➤ Nominal GDP growth seen at 10.5%
➤ Food Subsidy 2.12 lakh crore
➤ FY 24 Divestment Target Cut to Rs 30,000 crore
➤ FY 25 Divestment Target set at Rs 50,000 crore
Budget 2024 Highlights: Rail
➤ The Railways gets an allocation of Rs 2.4 lakh crore
➤ Three major economic railway corridors under the PM Gati Shakti to improve logistics efficiency and reduce cost
➤ FM announces three economic corridors - energy, mineral and cement
➤ Port connectivity and high-traffic density corridors announced as well
➤ Promotion of urban transformation via Metro rail and NaMo Bharat
➤ 40,000 normal train bogies to be converted into high-speed Vande Bharat ones
Budget Highlights 2024: PLI Scheme
➤ PLI scheme gets Rs 6,200 crore
Budget 2024 Highlights: Agriculture
➤ Promote investment in post-harvest activity by both private and public sector support
➤ Empower dairy farmers
➤ More efforts to control Foot and mouth disease
➤ Application of Nano-DAP to be expanded in all agro-climatic zones
➤ Crop insurance has been given to 4 crore farmers under PM Fasal Bima Yojana
➤ Five integrated Aqua Park to be set up
➤ Govt to launch Blue Economy 2.0 to promote aquaculture
➤ Implementation of Pradhan Mantri Matsaya Sampada Yojana to be stepped up to enhance aquaculture productivity, double exports and generate more jobs
➤ Direct financial assistance to 11.8 crore farmers under PM-KISAN
Budget Highlights 2024: Sunrise Tech
➤ FM Nirmala Sitharaman proposes Rs 1 lakh crore corpus to drive private investment in sunrise technologies
Budget 2024 Highlights: Healthcare
➤ Healthcare facilities under Ayushman Bharat will be extended to all Aasha workers, Aanganwadi workers
➤ Government plans to set up hospitals in all districts
➤ Vaccination of 9-14 year old girls for cervical cancer
➤ Saksham Anganwadi and Poshan 2.0 to be expedited for improved nutrition delivery, early childhood care and development
➤ Health sector to get Rs 90,170 crore, 13.8% higher than RE of Rs 79,220 crore for 2023/24
Budget 2024 Highlights: Education
➤ Education budget for 2024/25 seen at Rs 1.25 lakh crore, 14.5 per cent higher than revised estimate of Rs 1.1 lakh crore for 2023/24
Budget Highlights 2024: Housing
➤ New housing plan for the middle class
➤ 2 crore houses to be built under PM Aavas Yojana
➤ Pradhan Mantri Awas Yojana (Grameen) close to achieving target of 3 crore houses, additional 2 crore targeted for next 5 years
Budget 2024 Highlights: Renewable energy
➤ Viability gap funding for wind energy
➤ Setting up of coal gasification and liquefaction capacity
➤ Phased mandatory blending of CNG, PNG and compressed biogas
➤ Financial assistance for procurement of biomass aggregation machinery
➤ 1 crore households will be enabled to obtain up to 300 units of free electricity per month
Budget Highlights 2024: India Growth
➤ Next five years will be years of unprecedented growth
➤ Next generation of reforms to be taken in consultation with state governments.
➤ The government wants to make eastern region the driver of India's growth
➤ Over 1 crore houses will get 300 units of free power under new Solar power policy
➤ Women participation in higher education has risen to 28 per cent in the last 10 years
➤ Target for Lakhpati Didi to be enhanced from 2 crore to 3 crore
➤ Credit assistance to 78 lakh street vendors under PM-SVANidhi
➤ Over 22 crore Mudra loans disbursed in the last 10 years
➤ Our GDP mantra is: Governance, Development and Performance
➤ Jan Dhan accounts have helped government save over Rs 2 lakh crore
➤ Making Triple Talaq illegal, reservation of one-third seats in Parliament has enhanced the dignity of women in India
➤ Rs 30 crore mudra Yojana given to women entrepreneurs.
➤ Skill India mission has trained over 1.4 crore youth to make them job ready
➤ The highest-ever medal tally in Asian Games reflects the high confidence level
➤ Direct transfers of Rs 34 lakh crore to the beneficiaries has led to big saving for the government
➤ In the last 10 years government has uplifted 25 crore people out of poverty
➤ Garaab, Yuva, Mahila and Annadata are our highest priority. Their kalyaan is desh ka Kalyaan
➤ The Indian economy has witnessed great transformation in the last 10 year
➤ The country is facing enormous challenges and government overcame those challenges with Sabka Saath Sabka Vishvaas
➤ The fruits of development reached to every strate.
➤ The people blessed the government with the stronger mandate in the second term
➤ The worries of the food has been eliminated through free ration
➤ MSP have increased periodically for the Anna Data
➤ Garaab, Yuva, Mahila and Annadata are our highest priority
Budget 2024 Highlights: Lokapal gets Rs 33 crore, CVC Rs 51 crore
➤ Lokpal was given Rs 44.46 crore for 2023-24, which has been revised to Rs 47.73 crore for the ongoing fiscal.
➤ CVC allocated Rs 51.31 crore for the next financial year.
Infrastructure, tourism, defence, consumption and railways are among the key sectors that stand to benefit from the announcements made on February 1:
The interim Budget for 2024-25 did not have many big-bang announcements but there were many sector-moving decisions. Experts say that infrastructure, tourism, defence, consumption and railways are among the key sectors that stand to benefit from the announcements made on February 1.
PSU push: Public Sector Undertaking (PSU) stocks rallied on Budget day even as headline indices Sensex and Nifty ended marginally lower. The S&P BSE PSU Index, which comprises 56 government companies, gained 0.84 percent during the day.
Sandeep Tandon, Founder and Chief Investment Officer of Quant Mutual Fund believes that PSU theme is a key beneficiary of the Budget. “Most of our schemes have more than 20 percent exposure to PSU sectors,” Tandon said. Quant Mutual Fund on February 2 launched an active PSU fund, which will remain open until February 15.
Jitendra Gohil, Chief Investment Strategist, Kotak Alternate Asset Managers, is also of the opinion that the fiscally prudent Budget should support PSU valuations. “We maintain our positive view on PSU banks in particular,” he said.
Reacting to the budgetary announcements, net asset values (NAVs) of thematic funds such as Aditya Birla Sun Life PSU Equity, ICICI Prudential PSU Equity, Invesco India PSU Equity and SBI PSU Fund jumped up to 1.80 percent.
Meanwhile, Nifty PSU Bank exchange-traded funds (ETFs) saw a jump of around 3 percent during the day.
Defence in focus: As per a report by SBI CAPS, the defence capital outlay is set to expand to Rs 1.72 trillion in FY25 Budgeted Estimates (BE), surpassing the Rs 1.57 trillion allocated in FY24 Revised Estimates (RE). “This reflects the ongoing buoyancy observed in the defence sector,” the brokerage said in the report.
As per Incred Research Services, a higher share of indigenous procurement and higher allocation for procuring equipment bodes well for domestic manufacturers – positive for defence PSUs such as Hindustan Aeronautics,
Bharat Dynamics and Bharat Electronics. “Higher allocation for procuring aircraft and aero engines has been the key highlight, which would be positive for Hindustan Aeronautics,” Incred Research said.
As of now, there is only one fund dedicated to the defence theme. HDFC Defence Fund, with assets of Rs 1,849 crore as of December end, has delivered around 40 percent returns since its launch in June 2023.
Infrastructure under spotlight: The government, in the Interim Budget, has raised capital expenditure allocation for FY25 by 11.1 percent at Rs 11,11,111 crore. Analysts believe that this has the potential to enhance infrastructure development initiatives, particularly in the light of limited private capital expenditure.
Tarun Chugh, Managing Director and Chief Executive Officer, Bajaj Allianz Life Insurance, said, “The interim Budget demonstrates a clear commitment to stimulating economic growth through strategic investment in infrastructure, coupled with proactive measures to manage inflation. The notable 11 percent increase in capex outlay promises significant expansion for infrastructure development, given the strong base of last two years.”
According to Kotak Alternate Asset Managers' Gohil, infrastructure-related stocks within the domestic economy could see a boost from increased spending, although their valuations appear stretched in some areas.
While most infrastructure funds fell during Budget day, infrastructure themed funds have delivered up to 70 percent returns on a one-year basis.
Apart from these other sectors such as tourism, green energy, and capital goods are set to gain from the Budget announcements.
Harjeet Singh Arora, Managing Director, Mastertrust, said, “The Budget primarily emphasises capital expenditure and consolidation. In the long run, key sectors poised to benefit include infrastructure, renewable energies, aviation, railways, metros, power, and capital goods, as they receive government support through increased spending. Additionally, the government is fostering tourism by offering long-term interest-free loans to promote renowned tourist destinations.”
However, from an asset allocation perspective, financial advisors suggest retail investors be cautious of sectoral or thematic funds as these are highly risky, and if an investor is new to equity investing, then it is better to start with a diversified equity fund. Consider investing in a sectoral fund only if you hold a positive outlook on that specific sector or have access to quality advice. For thematic funds, achieving profitability requires precise timing for both entry and exit points.
Readers may click on the following link to get full insight of the Budget : Budget Highlights - Key Features - Ministry of Finance
Source: PIB.in, Budget highlights- Ministry of finance (https://www.indiabudget.gov.in/), Economic Times, Livemint, Money Control etc.