Upcoming Budget to Strengthen Government Balance Sheet and INR: Dr Vikas Gupta, CEO OmniScience Capital

 OmniScience Capital.

Finance Minister Sitharaman is set to unveil the Union Budget 2024-25 on July 23, aiming to enhance consumption through potential adjustments in indirect tax rates. The continuation of the same government signals a sustained policy framework, focusing on fiscal consolidation, infrastructure development, social upliftment, and other key areas.

We expect the budget to continue to focus on fiscal consolidation and remain growth-focused. The fiscal deficit is likely to be lower in the upcoming budget due to fiscal space created by the higher-than-expected dividend transfer by the Reserve Bank of India

The government is focused on the following principles:

1. Fiscal Deficit Control:

This will strengthen the government’s balance sheet and improve sovereign ratings, paving the way for the INR to become a hard currency in the long run. Alongside the inclusion of Indian bonds in the global bond index, these early measures contribute to a long-term plan for India to achieve developed economic status.

2. Strong Defense and Infrastructure:

We expect significant allocations to continue towards Defense, Railways, Power, Roads, Ports, and Airports. The focus on infrastructure will include multimodal logistics centers, enhancing railways for inland movement, and ports for external goods movement. Achieving the $2 trillion export target by 2030 necessitates this infrastructure push. For Defense, creating a strong domestic industry through FDI and local investments will be promoted, with a significant increase in domestic sourcing. The Gati Shakti program on logistics aims to reduce domestic costs from 14% to 8%.

3. Incentivizing ‘Make in India’ and ‘Make for World’:

Meeting export targets will require Production Linked Incentives (PLI) and other incentives such as R&D support and tax breaks. This might involve significant reductions in import duties for specific items needed for eventual exports.

Dr. Vikas V. Gupta, CEO & Chief Investment Strategist, OmniScience Capital

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