Ahead of the Union Budget 2024, experts and analysts have come up with different predictions on the government's move on fiscal deficit, taxation and the spending on welfare schemes. As several global financial services firms have predicted that the government may take the direction of fiscal consolidation, announcements by Finance Minister Nirmala Sitharaman during the Budget presentation on February 1 will be keenly watched by all.
Since it is an election year, the government will be presenting an Interim Budget instead of a full Budget.
Financial consultancy firm EY India, in its Budget 2024 expectation report, said that the government may look to encourage private investment with an extension to the concessional 15 per cent income tax rate for new manufacturing units.
The government had announced that any new domestic company incorporated after October 1, 2019, making fresh investments in manufacturing will have the option to pay income tax at the rate of 15 per cent if they began production before March 31, 2023. The deadline received an extension until March 31, 2024. According to EY, the government may extend this deadline to March 31, 2025.
Global financial firm Barclays has suggested that in Budget 2024, the government is likely to focus on fiscal consolidation while also prioritising capital expenditure. Barclays emphasised the need for debt reduction.
“The fiscal position for India appears well managed from a flow perspective, but there is a need for a reduction in debt. We expect the finance minister to signal further fiscal consolidation and provide long-term goals for deficit management to reduce the public debt burden and create more fiscal space," said Barclays.
Barclays has predicted that India's consolidated fiscal deficit will reach 9 per cent of GDP during FY 2024.
Goldman Sachs has made a similar prediction, suggesting that the government will look to consolidate the fiscal deficit to 5.3 per cent of GDP in line with its medium-term fiscal consolidation target of reaching 4.5 per cent of GDP by FY26.
Analysts at Goldman Sachs think the government will try to consolidate the fiscal deficit to 5.3 per cent of GDP given their medium-term fiscal consolidation target of reaching 4.5 per cent of GDP by FY26.
Another Big 4 firm, Deloitte has suggested the government could look to expand its investment in the energy sector. The company said that with Budget 2024, the government is likely to focus more on green energy. It further suggested enhanced private sector participation in infrastructure projects.
For the agriculture sector, Deloitte suggested focusing on strengthening the food processing value chain. It added that a reform for a clear concise Indian capital gains tax regime could also find a place in the Budget 2024.
