What Does India's Union Budget 2024 Hold for the Economy?

What to Expect from India’s Union Budget 2024?

As the much-awaited Union Budget 2024 approaches, industry experts and financial analysts have flooded predictions and expectations for the fiscal roadmap that the Indian government is set to unveil on February 1. This year, being an election year, the government is slated to present an Interim Budget instead of a full-fledged one. Whilst, the final Union Budget 2024-25 would be rolled out by the ruling government after the elections.

Ernst & Young Report

One key expectation focuses on the government’s aim to encourage private investment. According to the Budget 2024 expectation report by financial consultancy firm Ernst & Young, we can expect an extension to the deadline for a concessional 15% income tax rate for new manufacturing units.

The government had previously announced this incentive. It allows new domestic companies incorporated after October 1, 2019, to pay income tax at the reduced rate of 15% if they make fresh investments in manufacturing. EY anticipates a likely extension of the deadline from March 31, 2024, to March 31, 2025, in the Union Budget 2024Union Budget 2024.

Barclays’ Expectation

Barclays, an international financial services firm, echoes the sentiment of fiscal consolidation and emphasizes the need for debt reduction. It predicts India’s consolidated fiscal deficit to reach 9% of GDP during the fiscal year 2024. The firm expects Finance Minister Nirmala Sitharaman to provide long-term goals for deficit management to reduce the public debt burden and create more fiscal space.

Goldman Sachs’ Analysis

Similarly, Goldman Sachs predicts India’s Union Budget 2024 to focus on reducing the fiscal deficit to 5.3% of GDP. This aligns with its medium-term fiscal consolidation target of reaching 4.5 per cent of GDP by fiscal year 2026. Furthermore, analysts at Goldman Sachs believe that achieving this goal is pivotal for India’s economic stability.

Deloitte’s Prediction

Deloitte, another prominent player in the financial consulting space, envisions potential government initiatives in the energy sector. The firm suggests that the Union Budget 2024 will focus on green energy and increased private sector participation in infrastructure projects.

Additionally, for the agriculture sector, Deloitte proposes a concentrated effort on strengthening the food processing value chain. Moreover, the firm advocates for a reform in the Indian capital gains tax regime. It emphasizes the need for clarity and conciseness.

The Bottom Line

As the countdown to the Interim Budget begins, these varied predictions indicate the multifaceted expectations from different sectors of the economy. Hence, several queries have emerged, including whether the government aligns with the proposed extensions, fiscal consolidation targets, or sector-specific reforms.

India’s Union Budget 2024 is slated to be a crucial document shaping the country’s economic trajectory in the coming year. Therefore, the eyes of businesses, investors, and citizens are expected to be keenly fixed on FM Nirmala Sitharaman’s announcements. Currently, they’re eagerly awaiting insights into the government’s vision for economic growth and stability.

Hot Take: What Does India’s Union Budget 2024 Hold for the Economy?

The upcoming Union Budget 2024 has generated significant anticipation and speculation among industry experts and financial analysts. With predictions ranging from tax incentives for new manufacturing units to goals for deficit reduction and initiatives in the energy and agriculture sectors, there are high expectations for the government’s fiscal roadmap. As businesses, investors, and citizens await the announcements, the budget is poised to shape India’s economic trajectory in the coming year. The focus will be on how the government addresses key issues and charts a path towards economic growth and stability.