Capex spend : Quality of government spend continues to improve, with capital expenditure being steeply increased for the third year in a row. The share of capex in GDP has gone up steadily, from 1.67% in FY20 to 3.3% of GDP in FY24.
Fiscal Consolidation : Revised estimates for fiscal deficit (FY23) were in line with the budgeted estimates at 6.4% of the GDP, indicating consistency via commitment to fiscal discipline.
Digital Nation : The focus on digital nation continues, with promotion of DigiLockers, digital payments and digital library.
Consumption : Rationalization of tax slabs under the new tax regime, along with the increase in rebate limit to Rs. 7 lakhs is likely to increase consumption and support demand.
Market borrowings : To finance the fiscal deficit, market borrowings are estimated at Rs. 11.8 lakh crore.
Infrastructure Spending : The share of infrastructure spending increased from Rs. 1.2 lakh crore in FY20 and Rs. 3.6 lakh crore in FY23 to Rs. 5.2 lakh crore in FY24. 50 additional airports, heliports, aerodromes, other infrastructure to improve regional connectivity.
Sectoral Support
Renewable Energy
To achieve its target of net-zero carbon emission by 2070, Rs. 35,000 crore has been allocated for priority capital investments towards energy transition and net zero objectives.
Battery Energy Storage Systems with capacity of 4000 MWh to be supported with viability gap funding.
Customs duty exemption on imports of key inputs required for manufacturing lithium-ion cells for batteries used in electric vehicles.
Fintech Services
Expansion of scope of documents available in DigiLocker for individuals.
Tax benefits on Non ULIP’s Policy with premium exceeding Rs 5 lakhs to not receive any Tax benefit upon maturity (not death).
Real Estate
REITs/InVITs income distributed as capital reduction (repayment of debt) to unitholders to be taxed.
Deduction on long term capital gains arising from sale of house property if the capital gain reinvested in a residential house u/s 54 maximum deduction restricted to Rs 10 cr.
Outlay for PM Awas Yojana up by 66% to over Rs. 79,000 crore.
Sectoral Impact
Infrastructure
Roads The Rs.75,000 crore outlay (including Rs.15,000 crore from private sources) for 100 critical transport infrastructure projects, for last and first mile connectivity is a big push towards investments in road infrastructure.
Airports Announcement of 50 additional airports to improve regional connectivity would enhance infrastructure in tier 2 and tier 3 cities.
Energy A greener budget for FY24 with Rs. 19,744 crore allocated towards the Green Hydrogen Mission along with an Rs. 35000 crore allotted to priority capital investments towards energy transition is expected to give a boost to existing green energy projects as well as attract more foreign investments. Central Electricity Authority (CEA) has projected a 34.28% share for solar energy in its projected estimates for optimal mix of installed capacity for FY2030, indicating a higher contribution by solar in meeting future energy requirements.
Real Estate
Increase in the outlay under PM AWAS Yojana by 66% to Rs.79,590 crore for FY24, from Rs.48,000 crore in FY23 is expected to give a boost to affordable housing. Provision of a corpus of Rs.10,000 crore p.a towards creating urban infrastructure in Tier 2 and Tier 3 cities is a welcome move towards inclusive development.
Retail
Reduction in the number of slabs in the New Tax Regime from 6 to 5, with the tax exemption limit raised to Rs.3 lakh is expected to have positive spillovers in consumption, owing to higher disposable incomes.
Expenditure Profile
Fiscal Consolidation
New Tax Regime
Income
Tax Rate
0-3 lakh
Nil
3-6 lakh
5%
6-9 lakh
10%
9-12 lakh
15%
12-15lakh
20%
15+ lakh
30%
Budgetary support for capital expenditure increased by nearly 37% in FY24 budget estimates over revised estimates for FY23
Financing of the fiscal deficit through market borrowings estimated at Rs. 15.4 lakh crore for FY24, up by 8% compared to FY23, at Rs. 14.2 lakh crore.
Income
Tax Rate
0-3 lakh
Nil
3-6 lakh
5%
6-9 lakh
10%
9-12 lakh
15%
12-15lakh
20%
15+ lakh
30%
Budgetary support for capital expenditure increased by nearly 37% in FY24 budget estimates over revised estimates for FY23.
Financing of the fiscal deficit through market borrowings estimated at Rs. 15.4 lakh crore for FY24, up by 8% compared to FY23, at Rs. 14.2 lakh crore.
Nandkumar Surti, Co-Founder Kunal Shah, Head- Retail & Group CFO Ria Rattanpal, Research Associate
Team:
Nandkumar Surti, Co-Founder Kunal Shah, Head- Retail & Group CFO Ria Rattanpal, Research Associate
Disclaimer
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