Tax reforms, fiscal prudence, rural sops: Key expectations ahead of Union Budget 2024

Finance Minister Nirmala Sitharaman will table the first Union Budget of Modi 3.0 on Tuesday, July 23. With a timeline less than one week in hand, brokerage firms and Dalal Street participants have a long wish list of expectations from the union minister to boost the economic growth of the country.

As India eyes the target of a $5 trillion economy by 2025 and aims at 'Viksit Bharat' by 2047, market participants expect the FM to go with policy continuity and fiscal prudence along with various remedies to boost consumption across the nation. Rationalization of various taxations, income tax relief and higher capex targets are among the key wishes of the industry.

Nishit Master, Portfolio Manager, Axis Securities PMS expects the FM to  maintain policy certainty, continue investing in both physical and social infrastructure to build the long-term capacity of the economy, Simplify tax structures and further improve the ease of doing business along with practicing fiscal prudence.

Nirmal Bang Institutional Equities expects the fiscal deficit to be maintained at 5.1 per cent of GDP, same as in the interim budget. While the higher-than-expected dividend from the RBI does provide some room for fiscal consolidation to 4.9 per cent of GDP, that is not our base case, it said.

"While the capex focus will be maintained, some re-orientation of spending to provide a fillip to sluggish consumption is inevitable," Nirmal Bang added. "Incremental capex allocation will be constrained by a limited timeline for execution, although we see some possibility of higher allocation/re-allocation to Railways."

Participating in the Business Today Budget Survey, Trivesh D, COO, Tradejini wants removal/reduction in securities transaction tax (STT) and simplification of the taxation for the market to bring all the taxation under a single umbrella.

Shrey Jain Founder and CEO SAS Online - India’s Deep Discount Broker also expects FM Nirmal Sitharaman to present a pro-growth and fiscally prudent Union Budget. Tax rationalisation, Reducing transaction cost and simplification of dividend taxation are his key demands from the Sitharaman this year, besides increasing the investment limit under section 80C.

Implementing tax incentives, increasing capital expenditure, achieving fiscal consolidation, improving the ease of doing business, and establishing a stable long-term tax regime are among the key checklists of Manish Chowdhury, Head of Research, StoxBox for the forthcoming Union Budget.

Kotak Institutional Equities expects the Union Budget to provide higher capex targets, higher allocation to the rural and agricultural sectors and further fiscal consolidation—without shifting away from the existing prudent fiscal policy framework. "In our view, the RBI’s higher-than budgeted surplus transfer for FY25 and strong tax collections will allow the government to provide adequate support for capex and incremental support to consumption," it said.

In the BT Budget survey, Nitasha Shankar, Head Equity Strategy at YES Securities  wants the FM to decrease the individual tax rates along with removal/reduction in STCG and LTCG. "SOPs for foreign investors for increasing participation in the debt market to increase market depth," she adds.

Reliance Securities expects the government to boost the public health expenditure, higher allocations for the railways and power sectors, prioritize rooftop solarization and incentivize hybrid power, single-window clearance for the real estate sector and supporting the tax burden on telecom sector.