Union Budget 2024: Key Highlights and Market Reaction

Presented amidst a strong growth projection of 6.5% to 7% this year, as per the Economic Survey 23-24, Finance Minister Nirmala Sitharaman tried to strike the right chords with her seventh consecutive Union Budget. The message in Budget 2024 showed that the government is steadfast in its commitment to “Viksit Bharat” and steer the country’s all-inclusive growth.

Key highlights of Budget 2024

The key Budget 2024 highlights are as follows:

• Rs 1.48 lakh crore for education, employment and skill development
• A new scheme to offer one month’s wage to those joining the formal sector
• Purvodaya scheme for all round development of Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh
• E-vouchers of Rs 10 lakh loans to be provided to 1 lakh students for interest subvention of 3%
• Allocation of Rs 1.52 lakh crore for agriculture and allied sectors
• 3 crore additional houses in the rural and urban areas
• Capex outlay unchanged at Rs 11.11 lakh crore
• Expand the list of exempted capital goods which are used to manufacture solar panels and cells

Market reaction: Immediate impact

However, it seems that markets haven’t reacted positively to the announcements made in the Budget. The Indian stock market declined after the government proposed raising capital gains and derivatives taxes. NSE Nifty and BSE Sensex dropped about 1% each.

Sectoral analysis: Winners and losers

As per the announcements made, these sectors are likely to benefit from Budget 2024 announcements:

• Infrastructure and Construction: This sector is set to be a major beneficiary, with housing initiatives and a continued focus on capital expenditure.
• Education and Skill Development: The significant allocation and loan scheme for students will boost this sector.
• Agriculture: The substantial allocation for agriculture and allied sectors indicates continued support for this backbone of the Indian economy.
• Manufacturing: The wage subsidy for formal sector joiners could encourage more companies to hire, potentially boosting manufacturing.
• Financial Services: Banks and financial institutions are likely to benefit from increased lending opportunities, especially in education and housing.

Expert opinion and analysis

While markets may not have given a thumbs up to Budget 2024, experts are of the opinion that the Budget is a good one that focuses a lot on ease of doing business with a strong message for the industry and stakeholders of the economy. Many feel that the Budget will solidify India’s vision to become “Atmanirbhar”.

Long-term implications

The announcements made in the Union Budget 2024 can have several long-term implications. For example, the allocation of Rs 1.48 lakh crore for education, employment, and skill development is a substantial investment in human capital. This could lead to a more skilled workforce, better job readiness, and potentially higher employment in the long run. It could go a long way in preparing the country’s workforce to build skills to help them compete against the best domestically and internationally.

Similarly, the substantial allocation for agriculture and allied sectors (Rs 1.52 lakh crore) shows a continued focus and support for this vital sector of the economy. The announcements could lead to improved food security, increased rural incomes, and potentially a more modernised and efficient agricultural sector.

Maintaining the capex outlay at Rs 11.11 lakh crore signals a continued focus on infrastructure development. Over time, this sustained investment could lead to improved connectivity, more efficient logistics, and overall economic growth. It may also have positive spillover effects on various sectors of the economy.

Conclusion

The government has tried to balance fiscal prudence with populism in the Union Budget 2024. The FM has tried her best to do the balancing act, and only time will tell if she has succeeded in her endeavour.

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