Budget 2023 is anticipated to prioritize job creation
Analysts anticipate that the upcoming Union Budget would emphasize job creation. The last full-year budget before the Union Election in 2024, according to B. Gopkumar, MD & CEO of Axis Securities, is anticipated to be growth-oriented.
The Budget's main priorities are likely to be job growth and investment-driven growth.
According to Gopkumar, announcements to increase the current income tax incentive for homes may strengthen the real estate market.
The budget's main focus would be on initiatives to promote infrastructure development and rural expenditures.
Any plan to develop and support the entrepreneurial culture can encourage independence and contribute significantly to the creation of jobs. FMCG, Manufacturing, MSME, and Banking are a few sectors that may see action, Gopkumar said.
Anmol Das, Head of Research, Teji Mandi said, "With so many industries putting up demands for incentives for their individual sectors, we expect the FM to present a much expansionary budget with major impetus on infrastructure, manufacturing, defense, and Export driven businesses. While these subjects will fulfill the business sentiments for increasing the gravity of India as an Investment destination, viewing the next year's elections, FM Sitharaman may give some respite in the Tax Slabs and Exemption limits for direct taxes," Das said.
Apart from these general expectations, other focussed areas will be Disinvestment targets not met over the last several years, highly demanded in investment circles - change in durations of Capital Gains Tax, incentives for EV Charging station network development, incentives for initial encouragement for companies in Defense sectors for kick-starting indigenization of import banned equipment & ammunitions, etc.
Amar Ambani, Group President and Head, of Institutional Equities, Yes Securities said, "Even though expenditure for FY23 will likely surpass the budgeted numbers, the math will be under control due to the buoyancy in tax collections".
After the pandemic-induced spurt in spending, FY24 Budget expansion is likely to be a moderate one, with the economy has stabilized. From looking at the budget data of the last two decades, it is amply evident that the NDA tends to be less expansionary in the fiscal, Ambani said.
"The government will continue to focus on Capex and also persist with its intent to swell the share of Indirect Taxes, as is evident from the widening net of formalization. We see subsidy bills moving back to pre-Covid levels in terms of GDP size," he added.
Notwithstanding the fact that the government's debt servicing is a cause for concern - given interest payments significantly eating into revenue receipts - a decisive tilt towards small saving schemes should reduce the dependence on market borrowings and ease the pressure on sovereign yields, Ambani said.
This time around, the government is likely to be modest in its asset monetization targets, unlike the lofty projections of the prior budgets. In all probability, India's GDP growth target would be a low double-digit affair amid a challenging global backdrop, and the government would not stray from its fiscal prudence roadmap, Ambani said.
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