Finance Minister Nirmala Sitharaman will present the Modi government’s last full Budget before the General Election 2024. Investors are anxious ahead of the FM’s Budget speech after indices have turned negative on a year-to-date basis affected by high volatility in global markets amid the ongoing earnings season for the quarter ended December 2022.
While Sensex is down 2.12% or 1290 points, Nifty has lost 443 points or 2.45% in 2023.
On a yearly basis, the benchmark indices have managed to remain in green but not with major gains.
Since last Budget, Sensex has gained 2.65% or 1535 points and Nifty has climbed 322 points or 1.86%.
Dalal Street has a lot of expectations from today’s Budget ranging from relaxation in LTCG for investors, pragmatic divestment target and tax friendly announcements among others.
Here’s a look at key factors how the Budget is likely to affect the current and future investments of market participants
Emphasis on fiscal consolidation: Analysts expect the government consolidate the fiscal deficit to 5.8% of GDP in FY24. The government plans to bring down the fiscal deficit to 4.5% of GDP by FY26. Amid the the rising concerns in wake of global recession, the market will track the government’s performance in meeting its target.
Balancing act between fiscal consolidation and high spending: The FM is expected to do a tight-rope walk between staying fiscally prudent and general public expectations of lower taxes and a wider social security net. At the same time, top priority in front of the FM is firing the engines of the economy before general elections 2024 and rising concerns in the wake of a global recession. The Economic Survey has projected the Indian economy slowing to 6-6.8 per cent in the fiscal year starting April – still remaining the fastest-growing major economy in the world – as extraordinary challenges facing the globe will likely hurt exports.
Impetus on rural economy: The FM is expected to focus on lifting rural demand through the deepening of Production Linked Incentive (PLI) schemes. The government is likely to continue increasing capital expenditure from the existing 2.9% of GDP to 3.5% of GDP approximately.
Also read: Will FM Sitharaman tweak LTCG tax rate or holding period for stocks today?
Also read: Union Budget 2023: 40 sectoral wishes, 100-plus stocks to watch today