Edited excerpts.
What are your expectations for this budget?
With India’s G20 presidency and a keen eye on becoming the 5th largest economy, maintaining fiscal stability will be crucial. Balancing tax revenues with increased spending on infrastructure and social welfare programs will be a delicate task. From the next budget, we expect that the government will definitely choose the policies and measures that will boost domestic growth and investments, empower youth by creating more job opportunities and take correct measures to control inflation, all while supporting the deficit. .
Agriculture, healthcare, education and green energy are some sectors competing for attention. Budget allocations for these areas will affect rural livelihoods, access to quality healthcare and education, and India’s progress towards sustainable development goals.
We have seen that the rising fuel prices and cost of living have squeezed the middle class. The budget could offer tax cuts, targeted subsidies or increased spending on health care and education to address their concerns. In addition, measures to support vulnerable sections such as farmers, women and minorities will be closely watched.
While the full picture will emerge on February 1, these are some of the key themes to keep in mind as we approach the upcoming Indian budget.
What are your views on capital gains taxes? Should they be affected?
Since there is positive accumulation in the market, a long-term tax that is 10 percent would kick in and increase government revenue. The income that the government owns through these taxes could act extremely useful for the country, which is further used to improve infrastructure, tourism in our country, which at the same time boosts employment. As of now, the government is unlikely to implement any changes to the capital gains taxes.
Which sectors are focused in this budget?
Power Sector: Speaking of electricity sector, emphasis will likely be placed on renewable energy sources such as solar, wind, and green hydrogen, with increased allocation for research, development and deployment of these technologies.
In addition, investments in grid modernization, energy storage solutions, and smart grid technologies are expected to improve grid stability and integrate renewable energy sources efficiently. Also, the government’s continuous focus on promoting city gas distribution (CGD) projects to increase the use of natural gas, a cleaner fossil fuel alternative.
Infrastructure: Continued investment in infrastructure development, including roads, highways, railways, airports, and ports, increased allocation for renewable energy projects, tax credits for investments in green technologies, and political support for building energy storage infrastructure. This is considered crucial to boost economic growth, create job opportunities and boost the country’s youth.
Electric Vehicles (EV): The government’s ongoing efforts to promote the adoption of EVs to reduce dependence on fossil fuels and address air pollution concerns. In addition, an extension of the FAME-II subsidy scheme, a government initiative to encourage the development of electric vehicles (EVs), for EV purchases, investments in charging infrastructure development, and relaxation of import duties on EV components.
2024 is likely to remain a volatile year. What budget announcements can help reduce some pressure on the markets?
India’s budget needs a delicate balancing act. First, boosting domestic demand is crucial. Increased infrastructure spending, targeted tax cuts for key sectors and subsidies for vulnerable populations can inject much-needed cash into the system and boost consumption. In addition, it will generate jobs and attract fresh investments. This not only strengthens economic fundamentals but also paints a picture of a proactive government, improving sentiment. This counters external uncertainties and fosters internal growth.
Second, prioritizing fiscal prudence is essential. Controlling government spending, streamlining subsidies and exploring alternative revenue sources such as asset monetization can boost investor confidence. Maintaining fiscal discipline avoids excessive borrowing and strengthens India’s economic resilience in the face of global headwinds.
How can the budget help boost the manufacturing sector?
Today, after China, India has all the skills to become the manufacturing center in the world. Major global investors have their eyes on India today to set up their plants in our country. The manufacturing sector is considered extremely important and plays a huge role in the growth of any country.
From now on, budget reforms promoting the sector are extremely crucial. Implementing tax incentives, providing special economic zones and giving financial benefits to investors would attract many global conglomerates to become part of our country and act as a catalyst in the advancement of our economy. Higher investments would ensure job creation, many individuals would be employed, would also help fight inflation in our country, and would ensure that India would emerge as a superpower in times to come.
Budgetary reforms in the manufacturing sector would promote the Make in India policy. The main focus of this year’s budget should also be to give immense support to India’s PLI schemes by offering better provisions and incentives for the same. Today we are highly dependent on countries like China and Taiwan for our semiconductor needs and thus budget reforms must introduce new PLI schemes and support such sectors to acquire these facilities in-house, reduce dependency and make us “Aatma Nirbhar”.
Do you expect the RBI to cut rate in February after the budget?
The RBI is expected to cut rates in the month of February. The following could be taken considering global rates and more money being pumped into the market for the overall growth of the economy. Cutting the rates would ensure higher yields favorable returns for investors in various products like long-term funds along with government securities and bonds.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 25 Jan 2024, 13:28 IST