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The central theme of the Union Budget for the years 2024 and 2025 will be the continuation of the existing capex agenda (infrastructure, railways, defense, renewable/clean energy), increased budgetary allocations to revive the rural economy, job creation, and a firm roadmap for “Viksit Bharat” by 2047.

With strong reform measures and a visionary growth plan, the upcoming Union Budget is anticipated to establish a solid foundation for India’s economic, infrastructure, and social development over the next decade. With the emphasis on adding further catalyst and combining the ‘India development story’, it is normal that the speed of changes would be significantly assisted to speed up progress. Additionally, given that this would be NDA 3.0’s first budget for a full year, there would be high expectations.

We think that the government would find a balance between the deficit in the budget, growth-related CAPex, and social spending. The primary focus of the Union Budget 2024–2025 will be the continuation of the existing Capex agenda (Infrastructure, Railways, Defense, Renewable/Clean Energy), increased funding for the revival of the rural economy, job creation, and a clear plan for “Viksit Bharat” by 2047. Markets would also eagerly await any negative changes to the equity capital gains tax. In the event that there is no adjustment of capital additions charge it would be viewed as sure for the Indian value markets.

Fiscal Consolidation To strike a balance between macroeconomic growth and stability, the government would pursue fiscal consolidation. The public authority would endeavor to keep up with the financial shortage for FY25 underneath 5.1 percent, with an objective of accomplishing 4.5 percent by FY26, as determined.

Emphasis on capital expenditures:

While balancing the fiscal deficit, Expenditures will continue to dominate. Given the government’s vision of “Viksit Bharat” by 2047, the capex plan of Rs 11.1 lakh crore for FY25 is likely to be maintained in order to maintain the Fiscal Deficit target at 5.1 percent of GDP (compared to 5.8 percent of GDP in FY24) and reach 4.5 percent of GDP in FY26E. The government’s capex focus would continue to remain on defense, railways, and infrastructure development. The continuation of reform-promoting policies like PLI schemes and incentives for clean energy (RE, Green Hydrogen) would support the revival of private capital expenditures and the creation of jobs.

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Build up Measures to Restore Rustic Economy

The record profit of Rs 2.11 lakh crore got by the public authority from RBI, would give headroom to put resources into government assistance measures to restore rustic economy, with higher spending on taxpayer supported initiatives like the Pradhan Mantri Awas Yojana (reasonable lodging for all) and the PM Kisan Samman Nidhi Yojana (monetary help for ranchers). The likely welfare programs run by the government and the recent slowdown in inflation both indicate that the rural economy is on the road to recovery. This could also help increase demand throughout the economy as a whole.

Important Options for the Budget:

Concerning our top picks for this budget, we are optimistic about businesses that would benefit from Capex revival and recovery of rural demand.

Theme of rural revival: Capex/green energy at Mahindra & Mahindra, Hero Motocorp, ITC, and Sumitomo Chemical Power: Capex for defense: RIL, Power Grid, NTPC, and Sanghvi Movers Bharat Electronics and Bharat Forge play with water treatment: Wabag Capital Products: Real estate and building materials: Larsen & Toubro Finance: DLF, Ambuja Cement, and APL Apollo Power Railroads: Power Finance Corporation (PFC) International IRCON