Leading up to the Interim Budget 2024, scheduled for presentation on February 1 by Union Finance Minister Nirmala Sitharaman, market expectations are focused on various factors aimed at fostering growth.

Investors and market observers are eagerly awaiting key announcements, although the finance minister has clarified that no “spectacular announcement” is on the horizon for her sixth budget.

Sitharaman, acknowledging the political landscape, stated, “I am not going to play a spoilsport, but it is a matter of truth that the February 1, 2024, budget will just be a vote on account. This budget is designed to meet the government’s expenditure until a new government takes charge, given the upcoming elections.” The finance minister highlighted that a comprehensive budget for the financial year 2024-25 would be presented in July, post the general elections scheduled for April-May.

This anticipation underscores the importance of the interim budget in addressing immediate fiscal needs while recognizing its transitional role in a pre-election context. Investors are keenly observing how these financial measures will set the stage for the broader fiscal policy that unfolds after the new government assumes office later in the year.

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Key Focus Areas for Interim Budget 2024: What to Expect

As the Interim Budget 2024 approaches, here are five key areas to watch out for:
Capital Expenditure:

• Expectations are high for increased capital expenditure, particularly in the infrastructure sector.
• ICRA estimates a budgeted capex of ₹10.2 lakh crore in FY25, aiming to propel economic growth.
• A potential slowdown in capex growth could impact economic activity and GDP.

 
Jobs Creation:

• Anticipated measures to boost job creation in the rural sector.
• Incentives for investment in rural infrastructure and potential extension of production-linked incentive (PLI) schemes to sectors like chemicals and services.
• Deloitte suggests higher spending on rural infrastructure and broadening the scope of PLI schemes.

 
Fiscal Deficit:

• Despite poll pressure, a potential cut in fiscal deficit to 5.3% of India’s GDP.
• BofA Securities notes the expectation of the fiscal deficit consolidating further.
• Government commitment to reducing fiscal deficit to 5.9% in FY24.

 
Social Sector Schemes:

• Allocation of higher funds for social sector schemes likely, driven by increased tax buoyancy.
• Income and corporate tax collections show buoyancy, exceeding budget estimates by about ₹1 lakh crore.
• Government may leverage the surplus funds for social sector initiatives.

 
Consumption Boost:

• • Measures expected to boost consumption demand, particularly in the agricultural economy.
  • Finance Minister may announce initiatives to accelerate growth in the agriculture sector.
  • Advance GDP estimates indicate a deceleration in agriculture sector growth to 1.8% in the current fiscal year.

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As Union Finance Minister Nirmala Sitharaman prepares to present the Interim Budget on February 1, these key areas will shape the fiscal landscape and impact various sectors of the economy.

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