Exclusive insights into our expectations from the Union Budget 2023

Government To Work For Middle Class

The finance minister added that the government has worked and will continue to work for the country's middle class. The focus of budget 2023 would be on giving maximum relief to middle-class families.

She also highlighted that the middle class comprises the highest portion of the country and uses public transport more than anyone else. As a result, the government brought the metro and other cheap transport facilities to more than 25 places in the country. A lot of people shift to new cities in search of a job, and the government has also shifted its focus on building new smart cities, she added. Since this year's budget is the last full budget for the ruling NDA government before the 2024 general elections, experts claim that the middle class will massively benefit from taxation relief, jobs, and healthcare.

Challenges For Government

However, it's difficult for the government to focus equally on all the sectors as the worsening global economic environment may adversely affect the country in the coming times. International agencies have also reduced the country's GDP growth forecast. The spending in the budget is expected to be less as the fiscal deficit is already stretched, and the current account deficit is at a nine-year high. However, finance expert expects the government to spend on rural infrastructure and health to strengthen the country's backbone.

Against a range of expectations from various industries, including the stock market. This budget is anticipated to have a strong emphasis on long-term development while attempting to fortify the financial system. Energy, healthcare and pharma, specialty chemicals, technology, and manufacturing are going to be the emphasis of this budget, which is likely to be focused on infrastructure development, empowerment, digitalization, and incentivizing new-age production through PLI programs. What are the pre-budget forecasts for the stock market, despite the fact that the market has responded favourably in advance of Budget 2023? Experts anticipate that the market will most likely respond to the earnings season and the Budget announcement

Here are the forecasts for the stock market from Union Budget 2023–24, based on an exclusive conversation with Sonam Srivastava, Founder at Wright Research, a SEBI Registered Investment Advisor.

Union Budget 2023 expectations

Budget 2023 is likely to continue to focus on capital expenditure as a growth driver and give an impetus to manufacturing while continuing with the post-pandemic fiscal consolidation. The finance minister will try to boost capital expenditure further from the current 2.9% of GDP to nearly 3.5%. She might also rationalize personal income-tax rates to lift demand. The focus will also be to improve the ease of doing business. The Budget is expected to continue the focus on domestic manufacturing revival and PLI schemes for labor-intensive sectors are likely. Most importantly instead of going populist the Budget is expected to continue to focus on post-Covid fiscal consolidation and focus on divestment and reduction of subsidies.

With the budget coming at the beginning of 2023, the sectors that the government is looking to focus on - manufacturing, capital goods, defence, sustainability, railways, and public sector banks are already seeing fresh investments. We expect these sectors to continue to be in the spotlight. The theme of chasing stocks getting government Capex and incentives from the PLI scheme will outperform in the run-up to the budget. Even though this is the last budget before elections we might not see the government go populist but instead focus on fiscal consolidation in light of global volatility.

The market has fallen five times while gaining six times in the month ahead of the Union Budget in the last 11 years and has oscillated between -3 and +3%. The budget day has been positive most of the time and the post-budget has been more positive than negative.