Expectations of Budget 2024

Jan 30, 2024
Expectations of Budget 2024

According to an ET Online study, just 18.5% of participants expect populist news on the day of the Indian budget; more than 49% hope that the interim budget will provide the foundation for the full budget. Most people anticipate that the Finance Minister will offer broad economic direction. A direct tax change was ranked as the top priority by 38.4% of participants, whilst alcohol and gasoline inclusion under the GST regime was supported by 24.7%. While 15% of respondents advocated for new economy projects like technology and artificial intelligence, 22% backed steps to make business easier. After the new government is formed, the finance minister is anticipated to propose an interim budget in February and a complete budget in July. Let's go specific:

Current economic indicators and challenges

With a base growth rate of 6.9% to 7.2% from the fiscal years 2023 to 2024, India's economic prospects are favourable. However, because of the high cost of food and the unstable oil price, significant inflation is predicted to remain until the second part of fiscal 2024. The relationships between enterprises, industries, governments, and individuals will be impacted by the strategic growth of the nation, which will result in the development of intricate goods, services, and solutions.

India has to use its sizable home market to grow its commoditized product business and maintain its competitiveness. To have a beneficial and long-lasting effect on enterprises and the economy, corporate executives and legislators need to take advantage of new knowledge pool connections. Intensifying technological innovation, such as integrating the best accounting software in India, enhancing governance, and accomplishing decarbonisation targets for sustainability, can lead to inclusion and broad-based growth.

Global economic trends affecting the country

Two types of scenarios may be identified: optimistic and pessimistic. Given the containment of regional conflicts and the little disruption to global supply lines and the economy, the optimistic scenario will likely pass. Political stability is maintained after elections in India and other major industrialised nations, and growth in the US and EU is predicted to pick up steam in 2024. Due to mild inflation, the US Federal Reserve pauses raising policy rates. The global energy transition and the slowing Chinese economy also contribute to the low price of crude oil.

The Reserve Bank of India keeps its monetary policy more stringent to keep pressure on the lending industry at bay. The government is still working to combine spending, and the outcomes of state and federal elections do not signal political instability. PLI capacity investment and strong infrastructure capex drive up private investment spending.

In the gloomy scenario, protracted crises, political unrest, skyrocketing inflation, and increased natural disasters will slow growth. The Reserve Bank of India may raise rates again, but when growth slows down, it will back down. For businesses to gear up, they must adopt the best accounting software in India to keep up with the current situation.

Overview Of The Government's Fiscal Policy

India refrained from making large fiscal position increases during the COVID-19 pandemic but has subsequently resumed its fiscal consolidation route and increased the openness of its fiscal balance sheet. The federal government and the states have decreased their off-balance sheet borrowings, and their expenditure has shifted to more productive capacity-building initiatives. The government has continued to prioritise productive capital expenditures, as seen by the increase in capex's percentage of overall spending from 12.1% in FY21 to 22.2% in FY24.

Achieving a budget deficit of less than 5% of GDP in the next two to three years is essential for India's sustained growth. With bond index inclusions bringing Indian debt markets closer to international investors, it will be critical to lower interest rate volatility and maintain, if not improve, India's sovereign ratings, which are contingent on a reduced budget deficit.

International Trade And Relations

As one of the countries with the quickest growth rate, India is concentrating on boosting exports and encouraging homegrown manufacturing. The government has implemented policies like the Production Linked Incentive Scheme and free trade agreements with Western nations to accomplish these goals. Through import limitations and mandated standards, the government has also emphasised safeguarding the native industry.

Significant advancements in international trade between India and the rest of the globe have resulted from these efforts. Significant legislative and regulatory changes about foreign commerce have occurred in India in 2023; these advancements are mostly intended to shield the native industry against imports. This emphasis on local security could entice multinational businesses to establish operations in India, expanding the nation's economic prospects. Consequently, to have a deeper understanding of India's regulatory structure, comprehensive queries from outside exporters and investors are advised.

Union Budget 2024 : Expectations And Key Points

1. India's Fiscal Deficit and Tax Environment

• Fiscal deficit expected to be 5.3% of GDP in FY25.

• The government may extend a concessional 15% tax for new manufacturing units until March 31, 2025

• Minosha India MD anticipates a stable tax environment.

• Home Credit India CEO anticipates significant impact from government initiatives.

• Modinomics 3.0 prioritises global leadership and $10 trillion GDP.

• Ministries of Power and New and Renewable Energy seek increased funding and incentives for the National Green Hydrogen Mission.

2. Oil and Gas Industry's Green Energy Strategy

• Expected reallocation of expenditures for green energy.

• The oil public sector aims for net-zero goals and renewable energy investments.

3. Edtech Firms' Hope for Tax Incentives

• Expressing hope for interim budget tax incentives.

• A potential decrease in GST rates on digital educational content could improve online learning affordability.

4. Budget Cuts and Government Social Spending in India

• RBI balances lower interest rates to combat inflation with economic growth commitment.

• Experts anticipate RBI's extended pause, with some economists predicting interest rate reductions starting in June 2024.

• Jefferies predicts 7-8% growth in the government's social spending for FY25, excluding subsidies

• Government plans to augment social expenditure while curbing capital expenditure growth.

• Gahlot suggests reducing double taxation on dividends paid to shareholders.

• Jefferies predicts a deceleration in capex growth.

• Restaurants and hotels are optimistic about government support for the hospitality sector's growth.

• Power Minister RK Singh seeks more finance and incentives for green hydrogen.

• Standard deduction reintroduced in Budget 2018.

• Healthcare startup COO calls for a GST cut on alternative healthcare services.

• CARE Hospitals CEO Jasdeep Singh suggests enhancing the healthcare budget for better accessibility and affordability.

5. Budget Expectations for Salary Class and Tax Policy Changes

• Increase the basic exemption limit and Section 80C for salaried classes.

• Increase in senior citizens' savings scheme limit exceeding Rs 30 lakh.

• Enhancement of income tax rebates.

6. New Delhi Metro Corridor Announcement

• The Union Budget will unveil the new Delhi Metro corridor between Haryana and Uttar Pradesh via Delhi.

• Final approval stages for the proposed sixth corridor of Delhi Metro's Phase IV.

7. Tax Policy Changes

• Budget to simplify tax provisions and compliance.

• The Medical Technology Association of India (MTaI) urges reducing customs duty and removing ad valorem health cess on medical devices.


As industries await the 2024 budget with great anticipation, expecting a revolutionary change, businesses should adopt the best accounting software in India for seamless operations. Exporters seek a more hospitable climate with a standardised export tax structure to alleviate previous costs. The need to lift operating limitations reflects everyone's wish for a more robust economic environment in the next fiscal year.

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