India Budget 2024 steers economic growth amid fiscal prudence: Sujan Hajra

Union Budget 2024 news: The budget prioritises sectors like agriculture, education, and employment generation, broadening the base for economic advancement

Union Budget 2024 analysis: India's FY25 budget presentation stands as a testament to a well-calibrated blend of fiscal conservatism and aggressive growth strategies. With a clear alignment to prior fiscal forecasts, the India budget proposed a 17 per cent surge in public capital expenditure, accompanied by a modest 6 per cent increase in revenue spending.

This nuanced fiscal management is designed to trim the fiscal deficit to 4.9 per cent of GDP, improving on the interim estimate of 5.1 per cent.

The budget's core remains robustly attached to enhancing the infrastructure, manufacturing, and housing sectors—critical engines driving the nation's long-term economic fortitude. In parallel, the government has crafted specific initiatives aimed at boosting consumption among the economically weaker sections through a concentrated focus on agriculture and welfare programs, coupled with more accessible financial services.

 

The middle-income groups are not left behind, as the India budget introduced employment incentives and tailored income tax reliefs to spur consumption and inject vitality into the economy.

Expanding on this framework, the budget further prioritises sectors like agriculture, education, and employment generation, broadening the base for economic advancement and ensuring inclusivity in growth trajectories. This strategy is anticipated to catalyse a sustained recovery in consumer spending, especially at the grassroots level.

Sector-wise, the budget is poised to benefit industries such as agro-chemicals, automobiles, capital goods, cement, infrastructure, retail, and tourism. However, it presents mixed impacts for the real estate sector, which faces challenges from the removal of indexation benefits, albeit with reduced durations and rates and focus on affordable urban housing.

The IT sector might grapple with the implications of changes to the buy-back of shares policy.

Despite these extensive measures, the increase in capital gains tax and securities transaction tax on derivative products has dampened equity market enthusiasm. Yet, this effect is expected to be temporary, with the overarching fiscal strategy set to support a stable inflationary environment and foster sustained positivity in financial markets.

This Union Budget reflects a strategic balancing act, meticulously maintaining fiscal health while vigorously pursuing economic growth. It underscores the government's adeptness in navigating the complex landscape of economic governance, showcasing a commitment to fostering an environment where economic prosperity is both a priority and a reality.

This detailed approach not only aims to safeguard the immediate economic parameters but also secures a foundation for durable and inclusive economic health, echoing the government’s vision of progressive governance and robust economic stewardship.


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Disclaimer: Sujan Hajra is Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers. Views expressed are his own.