Budget 2024: India Inc looks for a consumption boost

The subsequent Union Budget is expected to introduce significant reforms in labour, land, agriculture, and energy policies, aligning with market expectations.

The forthcoming budget is a vote-on-account, implying no major announcements will be made, as mentioned by the Union Finance Minister herself during industry interactions. The consolidated 2024 budget will follow post-election results. It's important to note that the vote-on-account does not affect the existing tax regime.

Despite its interim nature, this budget serves as a potential indicator of future political developments. The upcoming Union Budget offers a chance to tackle ongoing concerns and lay the groundwork for economic growth. In 2024, India finds itself at a crucial juncture, undergoing substantial transformation both within the nation and on the global front. It is expected that the Government will reiterate their commitment to maintaining pragmatic fiscal management.

Corporate India expects the RBI to maintain rates until mid-year to curb electoral-economy inflation. Unless positive supply chain changes occur, there's an anticipation of sustained elevated food inflation in the first half of 2024, influencing the central bank's repo rate stance. While firm interest rate control aids long-term economic growth, it also keeps credit costs high, posing challenges for companies in capital raising.

As a Vote on Account, the primary anticipation from corporate India is for the government to convey a positive sentiment and send a message encouraging economic consumption. This is crucial for sustaining the upward trajectory of the "electoral economy," ensuring it continues to thrive post-elections. The subsequent Union Budget is expected to introduce significant reforms in labour, land, agriculture, and energy policies, aligning with market expectations.

The economy is resilient, yet challenges persist, particularly in areas like food inflation and rural sector growth. Substantial post-election government spending, coupled with reduced geopolitical uncertainties, sets the stage for a robust economic expansion in 2024. However, caution is crucial, given the impact of global oil prices and the complexities of geopolitical narratives and global protectionism.

The government has consistently prioritised growth strategies, seen in improved road connectivity, advancements in transportation infrastructure, localisation of imports, development of value chains for electronics and EVs, and the establishment of digital public infrastructure for nation-building. Industries expect a sustained focus on these initiatives, possibly accelerating in the coming year.

Traditionally, India has lagged in healthcare investment, and despite the lessons from the pandemic, improvement is imperative and time-sensitive. Proactive measures are crucial to tackle the expanding population and the rise in lifestyle diseases, impacting both social outcomes and the national economy.

Incentives, including tax breaks tied not only to capital expenditure but also healthcare services delivery and quality assessment, are anticipated to attract more investments. Additionally, any initiatives encouraging health insurance adoption will be welcomed by the industry.

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Augmenting standard deductions, elevating leave travel allowance limits, and expanding deductions for home purchases can be beneficial for middle-class taxpayers. Introducing higher tax incentives for first-time home loans and electric vehicles can further incentivise significant purchase decisions.

Strengthening women's empowerment and encouraging their increased workforce participation can act as a catalyst for GDP growth. Tailored credit schemes supporting women's entrepreneurial ventures are crucial, as exemplified by China's strategic encouragement of its female workforce, contributing to the growth of MSMEs and SMEs. Through targeted credit initiatives and a conducive environment, China expanded its economic landscape, leveraging the innovation and resilience inherent in a diverse workforce. To replicate such success, policies fostering gender equality, along with targeted financial support and skill development programs, can empower women to actively engage in entrepreneurial pursuits, especially within the SMEs and MSMEs sectors.

MSMEs expect improved finance access, including credit facilitation and lower interest rates. They seek tax reforms for financial relief, support in technology adoption, innovation, and streamlined regulations for operational ease. Skill development, collaborations with educational institutions, and measures for export promotion, cluster development, and risk mitigation are desired for enhanced competitiveness. MSMEs also advocate for eco-friendly practices, hinting at a potential government increase in the RAMP fund allocation.

The realty sector anticipates the release of specific lands owned by entities like Indian Railways, Port Trusts, Department of Heavy Industries, etc., by the respective government agencies. This measure aims to tackle the challenge of land scarcity within the affordable housing segment. This could reduce cost of affordable housing, and also ensure that newer affordable housing projects don’t necessarily position themselves much outside of the existing cities.

Also Read | Budget 2024 and the taxpayer: Higher basic exemption limits, more medical deductions needed

As India's ambitious clean energy goals intensify, the focus of the renewable energy sector shifts to the eagerly anticipated Union Budget 2024. The budget should encompass measures promoting indigenous development, facilitating technology transfer, and incentivising localised manufacturing initiatives for environmentally friendly solutions. Expectations include a reduction in duties on electrolysers, an augmented budgetary allocation for batteries and electrolysers within the Production Linked Incentive (PLI) scheme, and a reconsideration of GST rates specific to the renewable energy sector.