Budget 2024: From income tax relief to infrastructure boost – Nomura identifies 5 expected themes for Union Budget

Budget 2024 expectations: As Finance Minister Nirmala Sitharaman prepares to unveil her seventh Budget on July 23, the Modi 3.0 government’s Budget will not only reflect the administration’s response to new financial demands from its allies but also articulate its vision and reform agenda for the next five years. Brokerages such as Nomura anticipate a clear message of policy continuity and a robust commitment to fiscal consolidation.
Nomura analysts Sonal Varma and Aurodeep Nandi predict that the government will lower its fiscal deficit target for FY25 from 5.1% to 5% of GDP. This adjustment would signal the government’s determination to maintain fiscal stability, even in the face of a weakened political mandate. The emphasis on fiscal discipline is expected to be a cornerstone of this year’s Budget, according to an ET report quoting Nomura.

Budget 2024 expectations: 5 Key Themes

Nomura has identified five prominent themes that could shape the Budget:
1. Boosting Consumption: Income Tax Changes Expected
To stimulate consumer demand, the government may consider increasing the standard deduction limit for taxpayers under the new tax regime, which offers lower rates without exemptions. There could also be a rise in the exemption threshold for income derived from bank interest. Furthermore, a reduction in personal income tax rates for individuals earning between Rs 5 lakh and Rs 15 lakh is on the table, Nomura said, quoting reports.
Also Read | Budget 2024 income tax expectations: Why new tax regime is likely to be made more attractive
2. Enhancing Social Sector Spending
The Budget is likely to prioritize the rural sector by boosting allocations for various schemes. This includes an increase in subsidies for housing, estimated at Rs 23,000 crore (approximately 0.07% of GDP), along with enhanced funding for rural roads and employment initiatives. Additionally, the government might expand the public health insurance program and rejuvenate the Lakhpati Didi economic empowerment initiative for women.
3. Promoting Manufacturing
Nomura anticipates that the government will reaffirm its commitment to domestic manufacturing. Potential measures include raising the minimum local content requirement for public procurement, reinstating the 15% concessional corporate tax rate for new manufacturing facilities, and revising the 2019 policy on integrating the electronics global value chain. The Production-Linked Incentive (PLI) scheme is also expected to be extended to electronic components.
Also Read | Budget 2024 expectations: Ramp up private participation in airports & railways, says expert
4. Infrastructure Development
Public capital expenditure (capex) is poised to remain a fundamental aspect of the government’s economic strategy. Nomura forecasts an increase in the total capex outlay to 3.5% of GDP, up from 3.4% in the interim Budget. In response to state demands, the government might also enhance the unconditional transfers under the 50-year interest-free loan scheme for infrastructure projects.
5. Establishing a Medium-Term Economic Vision
This Budget marks the first significant financial roadmap following the recent elections, making it a critical opportunity for the government to lay out its medium-term economic vision. Analysts expect a comprehensive plan that outlines India’s aspiration to become a developed economy by 2047, detailing specific objectives for the next five years.