Budget 2024: Expectations from experts on capex, 80C tax deduction and start-ups

Expert opinions that can provide valuable insights into market expectations for the budget

The upcoming Interim Budget 2024-2025, to be presented by Finance Minister Nirmala Sitharaman before the Lok Sabha Elections, is poised to be a vote on account. With less than 24 hours remaining until the budget announcements, anticipation is high as all eyes eagerly await the forthcoming declarations.

Expert opinions that can provide valuable insights into market expectations for the budget-

Capex

Amar Ambani, Executive Director at YES Securities shares his thoughts - “Budgets prior to general elections are usually a lukewarm affair. But we can expect the government to continue with its agenda of boosting capex as a percentage of total expenditure. We also foresee non-government enterprises incrementally cajoled through incentives to help lift the private capex cycle.

Talking of fiscal prudence, the government is likely to be aggressive on its fiscal deficit target, especially in the wake of buoyant tax collections. We can expect a commitment to achieve a 4.6 per cent fiscal deficit in FY26. Given the inclusion of Indian bonds in global indices, this seems imperative.

Income support to farmers in the last instance was introduced just before the general election. This time around, given the flurry of subsidies in various forms since Covid, including distributing food grains, and coupled with the strong mandate in recent state elections, we don't foresee the government announcing any material sops on the socio-developmental front."

Incentivising financial institutions for affordable housing

Saurabh Birari, CFO at Switch My Loan, conveys - "We believe that the upcoming budget presents a pivotal opportunity for India to pave the way for inclusive and sustainable financial growth.

Firstly, we advocate for a thorough examination of initiatives geared towards expanding access to credit and banking services, particularly for marginalized or unbanked populations. Underserved Markets, often hampered by infrastructure gaps, merit special attention in budgetary considerations. The budget must encourage and incentivize financial institutions to extend their services into these areas, thus contributing to the overall development.

In this era of rapid technological advancements, the budget's stance on digital transformation in lending is of paramount importance. Embracing and promoting technological innovations in the lending space will not only enhance efficiency but also empower businesses to better serve their customers in an increasingly digital world.”

Shauryam Gupta, CEO at Rupeezy, expresses - “The 2024 budget will not be a full budget but rather a vote on the account so one can expect a populist budget. Adhering to the customary practice of an interim budget, significant announcements are not anticipated, as reiterated by the finance minister. However, there is speculation that sectors such as affordable housing, aligned with welfare spending, may receive a notable boost. 

The government is also expected to maintain some degree of fiscal discipline to meet the fiscal deficit targets by FY26. And since the revenue collection is above the estimates in recent months different stakeholders of the economy, especially the middle class, would also be expecting some tax relief. The government should stick to the trend of fiscal discipline, keeping in mind long-term sustainable prosperity for the nation. The Indian populace is smart enough now to comprehend the adverse repercussions of populism, drawing lessons from recent instances in countries such as Sri Lanka.”

80C tax deduction limit and Start-ups

Aryaman Vir, the CEO at WiseX states - “As the interim budget nears, we at WiseX are closely watching for the expected rise in the 80C tax deduction limit to Rs 2.5 lakh, which could greatly benefit taxpayers. Our focus on alternative investment and real estate has us keenly aware of the need for reform in long-term capital gains taxation. With the current 20 per cent tax rate after indexation on real estate for holdings beyond 24 months, we're advocating for more favourable policies to encourage investment in this crucial sector.

We're also optimistic about the proposed enhancements in financing, which are vital for real estate sector growth. The government's initiative to create AI centres of excellence signifies a dedication to technological advancement, with effects that will extend throughout the economy and invigorate the real estate market. Supporting incubators and accelerators for startups is not merely about fostering innovation; it's about preserving consumer confidence in the rapidly expanding domains of AI and ML, which is paramount for a trust-based relationship with technology.”