Budget 2023 Expectations Highlights: Budget 2023-2024 is scheduled to be presented before the Indian Parliament by Finance Minister Nirmala Sitharaman on February 1, 2023. Experts opine that this Union Budget is likely to take a “balanced approach” towards fiscal consolidation and economic growth. They also expect more focus on capital expenditure towards infrastructure such as railways, roads and defence projects and the expansion of the Centre’s production-linked incentives scheme to more sectors. Besides this, boosting rural demand and lowering divestment targets and increasing tax exemptions are other key expectations. Further, tweaks to capital gains tax or its tenure structure would also be keenly watched by the Street. Notably, this will be the finance ministers fifth full Budget speech and the third to be delivered in paperless format. This is also the last full Indian Budget ahead of the General Elections in 2024.
Poll-oriented spending may get a boost this Budget
With the national elections scheduled to be held next year, the last full budget of Prime Minister Narendra Modi government is expected to increase welfare spending with a special focus on rural and infra capex, a report by the Swiss brokerage UBS stated.
Experts say mental health insurance, affordable healthcare should be considered by FM Sitharaman
When most of the country’s workforce is back in office, experts feel it is important to keep a tab on our mental well-being.While presenting the Union Budget 2022, Finance Minister Nirmala Sitharaman acknowledged the increase in mental-health problems in people across age groups in the wake of COVID-19 pandemic. To address the concerns, the Union minister announced 23 tele-mental health centres to be launched with the National Institute of Mental Health and Neuro Sciences (NIMHANS) as the nodal centre. Experts are hopeful that Sitharamanwould keep mental health insurance and affordable healthcare in focus while rolling out the Union Budget 2023. Read full report
The PM Modi government will present its last full Budget on February 1 amid global and domestic headwinds.
Last full Budget for PM Modi's govt before 2024 polls
This is the last full Budget of Prime Minister Narendra Modi's government before the 2024 national elections and the union government is expected to boost welfare spending with a focus on rural and infra capex in this year’s Budget.
Budget 2023 expected to continue social welfare spending, says Ind-Ra
India’s economic recovery is not broad-based yet as only creamier sections are consuming currently, India Ratings and Research (Ind-Ra) said, adding that the upcoming Budget is thus expected to continue with the social sector spending.
Pre-budget live update: FPIs are taking a cautious stance before Budget
Foreign investors have pulled out a net of over Rs 17,000 crore in January as it has adopted a cautious stance ahead of the Union Budget 2023-24, among other reasons.
Homemakers in Patna complain regarding rising prices of LPG cylinders
-A bunch of homemakers in Patna, Bihar stated that the constantly rising rates of LPG gascylindersis is leaving an impact on the massesbelongingto the middle class a lot. They have urged the government to provide some relief from the same.
Need simpler ITR forms for disclosing income for taxes, say experts
Under the laws of income tax, gains arising on capital assets, both movable as well as immovable are charged under the category of 'Capital Gains'. The tax rate varies for different asset classes.
Equity investors are watching out for the Union Budget 2023-24, says analysts
Equity investors are watching out for the Union Budget for 2023-24 this week along with domestic macroeconomic data announcements, which could influence trading in the market, analysts said.
“With the Union Budget scheduled to be unveiled on February 1st, the week will be jam-packed with activity,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.
Need simpler ITR forms for disclosing income for taxes, say experts
-The expectation from the Union Budget is to bring in a rather simpler tax return form for assesses having solely capital gains or dividend or interest income, along with simplifying capital gains tax regime, as stated by experts.
PM Modi chairs a meeting of Union Council of Ministers ahead of Budget
-Expected to conclude in the evening, the discussion includes working of several ministers and policy initiatives being taken by the Modi government, as per sources.
Over 17000 crores pulled out by foreign investors this month, due to the appeal caused by Chinese markets ahead of the Union Budget of 2023
Already announced CPSEs to be privatised in the next fiscal by the Finance Ministry
The Finance Ministry will proceed with the planned privatisation that has already been announced. The chances of the new addition to that list of CPSEs in the Budget for 2023-24 is unlikely, sources said.
The disinvestment target outlined in the Budget for the next fiscal is likely to be a scaled-down and realistic one, as the budgeted PSU sell-off target is going to be missed for the fourth year in a row this fiscal.
Election-related issues to get boost in Budget 2023
The Indian government may boost welfare spending with a focus on rural and infra capex, as per a report by Swiss brokerage UBS. This comes ahead of the General Elections in 2024 and as the Modi government presents its last full Budget.
It expects that the impending elections will cast its sway on the Union Budget, and will see the Centre prudently boost welfare spending and maintain double-digit growth in public capex in FY24. “Cutting fiscal deficit to 4.5 percent of GDP by FY26 looks ambitious,” UBS India economist Tanvee Gupta-Jain said in a note. Read details here
Budget 2023: Finance Ministry to stick to privatisation of already announced CPSEs next fiscal
New additions to the Finance Ministry’s planned privatisation list is unlikely, sources said when asked about Budget 2023-24. No major disinvestment announcement is expected in this Budget, they said.
“Chances of new addition of CPSEs is unlikely. The plan is to move ahead with the strategic sale of the companies for which the Cabinet approval is already in place,” they told PTI.
Moreover, they think the announced divestment target will be “scaled down to a realistic one”. This expectation comes as the Centre’s budgeted PSU sell-off target has already been missed thrice and will again be missed for the fourth consecutive time this fiscal. Of the Rs 65,000 crore which was budgeted, only Rs 31,106 crore has been met via minority stake sales in PSUs.
Experts on their part feel that tax incentives and regulatory exemptions would sweeten the pot for prospective private sector buyers. Read more here
Traders eye Budget ahead of rocky market close last week
Several policy measures in the Union Budget will set the tone for the financial markets and the Indian economy. Traders expect a “balanced Budget” which provides a consistent outlay to cut fiscal deficit to 4.5 percent by FY26, from the 6.4 percent on FY23. Experts also say focus on infra, green energy, EVs, digital tech, PLI schemes and boosting of rural demand is expected.
Varun Lohchab, Head of Institutional Research at HDFC Securities feels that the government should increase capex by 20-25 percent and focus on supply side infra. He also expects higher allocation towards food subsidy, employment guarantee, and rural infrastructure, given that elections are scheduled next year.
Indians want higher tax ememptions: Kantar survey
Indians want higher tax ememptions, a Kantar survey found. Overall, it noted that consumers expect an announcement in policy changes with respect to income tax.
- First common expectation is for a rise in the basic exemption limit in income tax from Rs 2.5 lakh.
- Second is an increase in the threshold limit of highest tax slab rate of 30 percent from Rs 10 lakh now.
- Further, around 66 percent respondents expect increase in the tax rebate for investments under Section 80C. Read more details
Budget 2023 may provide income tax relief to middle class
Since salaried employees are an important source of revenue and this is the last budget before elections, the finance minister may provide relief to the middle-class by increasing the exemption limit and incentivise investments, feels Anil Rego founder and fund manager of Right Horizons.
- Since salaried employees are an important source of revenue and it is the last budget before elections, the government will likely provide relief to the middle-class by increasing the exemption limit and incentivising savings and investments.
- There are more than 80 million taxpayers in India, and salaried employees are the biggest contributors to taxes, in India. The basic income tax exemption limit is Rs 2.5 lakh for individual taxpayers under both the old and new income tax regimes which may be raised to Rs 5 Lakh, and the standard deduction of Rs 50,000 could be enhanced to around Rs 80,000, rendering some tax relief to the country’s middle-class population.
- Increasing tax exemption will provide relief to the lower-earning class consumers since they are facing challenges such as high inflation leading to lower savings, increasing interest rates have increased the monthly EMIs for home loans and other loans, and higher fuel prices have impacted the household budget. Tweaking the slab rates and providing relief will lead to an increase in disposable income and boost consumption. Read full interview here
Briefcase to ‘bahi khata’ to tablet: A short history of Budget presentation
RK Shankmukham Chetty, India's first finance minister hadcontinued the British tradition by carrying documents for the first Union Budget of independent India in a leather portfolio bag. Over the next few years, different finance ministers used different briefcases for the Budget.
However, Sitharaman’s decision to use the bahi khata, provided an Indian touch to the Budget exercise. Over the decades business owners and households used the bahi khata to maintain their accounts.
The traditional carrier of Budget papers made an appearance for the second and last time in 2020. The following year, however, this traditional book of accounts gave way for a more modern device. Nirmala Sitharaman presented the Budget in 2021 in paperless format by using a made-in-India tablet. She carried the tablet to parliament in a red bahi khata-style pouch in 2021 and again in 2022.
Analysts ahead of Union Budget: Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities
The Nifty ended the truncated trading week 2.35 percent down. The index broke below an important support of 17,800, which it was holding for a month. It formed a reverse flag formation and broke the support.
This indicates that there could be further selling pressure. In that case, the index can drop to 16,750. Immediate support is placed at 17,500. Resistance for the index is at 17,800.
With the Budget 2023 to be unveiled on February 1, the following week will be packed with activity. Markets will remain erratic as all eyes will be on the finance minister's final comprehensive budget before the general elections. Quarterly earnings season will also have an impact on how stock moves.
The Fed meeting will catch market players' eyes on a global scale. Next week, the unemployment rate will be announced, and the markets will try to interpret the state of the world economy. Investors ought to exercise caution and put their money in companies with solid fundamentals.
Budget 2023: Market view of stocks - Defence
With the indigenisation of defence, there is a huge opportunity for manufacturers in the sector.
India is on track to meet its $5 billion exports target for defence equipment, driven by the government’s focus on increasing outbound shipments, Prabhudas Lilladher said in a report in October.
Currently, a lot of foreign original equipment manufacturers depend on China and Russia for defence equipment, which provides huge opportunities to Indian manufacturers for boosting exports led by the China plus one strategy, the brokerage firm added.
Healthy order books and the government’s push for localisation have steered many fund managers to believe that defence stocks are an attractive bet at this point in time. Plus, expectation that the government might announce some more measures for indigenisation have also spurred buying in defence stocks.
Budget 2023: Market uneasy amid Budget worries, FII on selling spree
The market appeared to be uneasy ahead of the Budget 2023 and the Fed meeting, Vinod Nair, Head of Research at Geojit Financial services said. Foreign institutional investors were selling as funds were being shifted to other emerging markets because of attractive valuations.
Foreign institutional investors (FIIs) continued their selling spree and offloaded equities worth Rs 9,352.18 crore in the week. Domestic institutional investors (DIIs) provided support, as they bought equities worth of Rs 7,210.53 crore.
In January, so far, FIIs have sold equities worth Rs 29,232.29 crore and DIIs have bought Rs 23,392.91- crore worth of shares.
An increase in funding towards capital expenditure and rural areas within the constraints of the fiscal deficit controls would be favourable, he said.
“…Any unfavourable proposals, such as an increase in LTCG rates/ duration or populist measures due to the pre-election budget, could add to the bearish mood in the short term," he said.
Budget 2023: Market view of stocks - Railways
Some market participants believe railway stocks are a tactical buy ahead of the budget.
Besides, decent growth visibility because of a likely increase in railway capital expenditure has also propped up sentiment for the sector.
There are also hopes of some announcements related to the sector in Sitharaman’s speech. Additionally, expectations around meaningful divestment in public sector rail units have also piqued investor interest in the segment.
Budget 2023: Market view of stocks - Infrastructure
Historically speaking, infrastructure has been the hot sector ahead of Union budgets, said the PMS head of a leading mutual fund who asked not to be identified.
“We expect announcements around allocations towards PLI budgets, mega parks and infrastructure for bringing together supply chains for various sectors, and capital expenditure for infrastructure creation around logistics,” Divam Sharma, founder, Green Portfolio, a SEBI-registered portfolio management service said.
According to a report, the government has planned to sharpen its focus on infrastructure growth in the upcoming budget by allocating 30 percent more funds for the roads ministry to speed up construction to more than 50 km of highways daily.
The head of research at an automated investment service provider highlighted that logistics companies such as warehousing, cargo and shipping companies could also be a good play at this point in time.
Budget-sensitive stocks | How to play these ahead of the D-Day?
With 2023 in sight now, investors have started to focus on the upcoming Union budget for the next fiscal year. There has been much talk about macro headwinds of slowing growth in the US and a likely recession in the UK and Europe, leading to a belief that market participants will parse Finance Minister Nirmala Sitharaman’s speech while analysing the budget.
Azeem Ahmad, head, PMS and principal officer, LIC Mutual Fund said infrastructure development, broad-based capital expenditure and manufacturing-led growth where the government is already focused remain the key areas.
He added that budget stocks are generally a ‘buy on rumour and sell on news’ play. Sharma also pointed out that one could look at sectors where a spending announcement is likely such as PSU divestment, railways and infrastructure.
Union Budget 2023: Expectations for increase in capex
Sectors like infrastructure, railways, defence, public sector undertakings and renewables are expected to witness an increase in spending by the government.
The market will be satisfied if there is an increase in capital expenditure (capex) by 15 percent for FY24, said 53.3 percent of the surveyed participants. Whereas, 43.3 percent believe this is worse than they expected and that they will be disappointed.
On being asked about their reaction if capex is increased by 15-30 percent, 48.3 percent said this is what they expected and will be satisfied, while the other 48.3 percent feels they would be pleasantly surprised.
Meanwhile, 93 percent believe the scenario where capex for FY24 is above 30 percent will be great and will definitely surprise them pleasantly.
Union Budget 2023: Expectations for nominal GDP growth
Nominal GDP growth for the year is expected to exceed the Budget 2022-23 estimate by a substantial margin. According to data released by the statistics ministry, India's nominal GDP is estimated to grow 15.4 percent this year. This is 430 basis points higher than the estimate of 11.1 percent made by the finance ministry in the Budget presented last year.
Around 67 percent of participants surveyed by Moneycontrol said a nominal GDP growth of less than 7-9 percent is worse than expected.
A large section of the surveyed participants will be satisfied if the nominal GDP growth is at 9-11 percent, while 72.4 percent would consider 11-13 percent nominal GDP growth rate as great.
Here are the common man's expectations from the Union Budget 2023-24
The common man is worried about inflation because of a looming global economic slowdown and a potential resurgence of Covid-19. Layoffs and slowdown in US and Europe is keeping the mood of the nation cautiously optimistic. People expect a rise in the basic exemption limit in income tax.
- Three out of every four persons are worried about the rising inflation and want the government to introduce decisive measures to tackle it in the upcoming Budget.
- One in ever four Indians is also concerned about job-losses. This is relatively higher in the affluent class, amid people in the age group of 36–55 and salaried class.
- A rise in the basic exemption limit in income tax from Rs 2.5 lakh is the most common expectation among consumers, especially the salaried class, followed by the increase in the threshold limit of highest tax slab rate of 30 percent from Rs 10 lakh now.
- Two-thirds of the respondents said they want to see an increase in the tax rebate for investments under Section 80C.
- With rising healthcare costs, compounded by rising inflation concerns impacting household incomes, increase in rebate on medical and health insurance is the next big ask among the consumers.
- While the hope is that the worst is over, the pandemic has still not disappeared yet. Hence, a majority of respondents said that they want continued focus on healthcare in this Budget as well.
Union Budget 2023: Expectations for Fiscal Deficit
Half the surveyed participants believe that fiscal deficit for FY24 at 6.0 percent is worse than what they expected, whereas on being asked about their reaction if the figure stood at 5.6 percent, 76.7 percent believed it will be pleasantly surprising.
Meanwhile, fiscal deficit for FY24 at 5.8 percent would satisfy the market, suggested the survey.
Recently, Morgan Stanley said that it expects fiscal deficit to be 5.9 percent of the GDP in FY24, against 6.4 percent estimated for FY23.
Union Budget 2023: Expectations for Divestment Target
With the mop-up falling short this year, the Indian government is seen setting a conservative divestment target for fiscal 2024. The Indian government has set a divestment target of Rs 65,000 core for 2022/23.
Half of the surveyed participants believe that the disinvestment target for the year will be pegged at Rs 30,000-Rs 50,000 crore. Speaking about another scenario of the target being Rs 50,000-70,000 crore, 53.3 percent of the participants said they will be pleasantly surprised.
Meanwhile, a large section of the market would be even more surprised positively if the disinvestment target for the year is above Rs 70,000 crore. Over 83 percent believe so.
Budget 2023 Expectations Survey: What the market thinks about the government's divestment target
Moneycontrol conducted a survey of 30 market experts, including fund managers, analysts, heads of research, chief investment strategists and officers, to get responses on some important questions relating to the upcoming Union Budget.
Read here
Budget 2023 Expectations LIVE:
Good morning and welcome to Moneycontrol's LIVE coverage of the Pre-Budget Expectations for fiscal 2023-2024. Stay tuned for the latest news, developments and more!
