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Budget 2024: A Comprehensive Look at Expectations Across Key Sectors

TeamAckoNov 7, 2024

Anticipation is building across various sectors of the economy as Nirmala Sitharaman prepares to present the Union Budget to the Parliament on July 23, 2024. This mid-year budget holds particular significance as it comes at a time when India is positioning itself as a major global economic player, capitalising on geopolitical shifts and technological advancements. Stakeholders from different industries eagerly await policy announcements and fiscal measures that could shape the country's economic trajectory in the coming years.

Let's take a look at the key expectations from Budget 2024 across some major sectors:

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Contents

Budget 2024 for the Insurance Sector
Budget 2024 for the Fintech Industry
Budget 2024 for Senior Citizens
Budget 2024: Automobile Industry
Budget 2024 Trading Strategy
Budget 2024 for Manufacturing Industry
Budget 2024: Real Estate Sector
Conclusion

Budget 2024 for the Insurance Sector

The Budget presents a key opportunity to support the Indian life insurance sector in achieving the IRDAI vision of 'Insurance for All by 2047'. Meeting this ambitious goal requires robust policy measures in the budget to address challenges and unlock future growth.

A new separate deduction category can be introduced exclusively for life insurance premiums. This will incentivise long-term insurance coverage and make it more appealing as a financial instrument.
Targeted incentives like lower GST rates and government co-funding schemes can encourage insurers to enter rural and underserved markets. This will drive penetration where awareness is currently low.
Regulations around microinsurance can be eased to expand its scope and boost financial inclusion. Tax deductions on microinsurance premiums and facilitating distribution through local channels can improve accessibility.
There can be a focus on promoting affordable term insurance to provide accessible protection against unforeseen events.
Integration of retirement schemes like NPS with insurance products will offer individuals a comprehensive solution for retirement planning and long-term savings.

The budget needs to uplift life insurance as a tool for financial security and capital mobilisation. The right policy initiatives can unlock immense growth potential.

Budget 2024 for the Fintech Industry

The fintech industry has high expectations from the upcoming Budget 2024, having submitted their recommendations to the Finance Minister. Here's what the budget may provision for the fintech sector:

Provisions to expand India's digital public infrastructure as internet access rises. This will enable wider reach of digital financial services.
Announcements to improve security measures for digital financial transactions and make digital payments safer.
Tax exemptions on expenditures for fintech companies expanding financial access to the underserved sections. This recognises their social objective.
Lower taxes for fintech companies providing financial and digital services to marginalised communities. This encourages financial inclusion.
Removal of 'angel tax' for fintech startups focused on serving small towns and villages. This supports financial inclusion goals.
Reduced import duties on critical fintech devices like POS machines required for digital payments.
Increased financing for cybersecurity infrastructure and a national cybersecurity policy to strengthen data protection.
Tax subsidies for investments in cybersecurity R&D to boost innovation in securing digital finance.
Strengthening of data protection laws and compliance mechanisms related to cybersecurity.
Partnerships between public sector banks and fintech firms to utilise complementary strengths for financial inclusion.
Investments by public sector banks in technologies like blockchain and AI to improve services by collaborating with fintech companies.

Budget 2024 for Senior Citizens

Senior citizens are keenly watching the upcoming budget for provisions that can improve their financial security and access to healthcare. Some key expectations include:

Raising the deduction limit for health insurance premiums or Mediclaim premiums to Rs 1 lakh will provide higher medical coverage to seniors, given rising healthcare costs.
Lowering the age exemption for filing income tax returns from 75 years to 60 years. This will reduce the compliance burden for a wider segment of senior citizens.
To improve liquidity for seniors, the lock-in period for investments like PPF, NSC, etc., under Section 80C could be revised to 10 years.
Enhancing the maximum deposit limit for the Senior Citizen Savings Scheme from the existing Rs 15 lakh to Rs 30 lakh. This will allow seniors to invest higher amounts in this safe scheme.
Introducing tax-free health savings accounts that allow rollover of unutilised amounts to the next year. This will incentivise seniors to save for future medical expenses.
Higher tax deductions for expenses incurred in treating critical illnesses like cancer, stroke, organ failure, etc.

The budget must adopt a senior-friendly approach to taxes, investment rules and healthcare incentives. This will empower India's elderly with better financial adequacy and access to affordable healthcare.

Budget 2024: Automobile Industry

The automobile industry is looking to Budget 2024 for supportive policies and incentives to boost the electric vehicle (EV) segment amidst divided preferences for EVs versus hybrids. On one side, Maruti Suzuki and Toyota Kirloskar advocate reduced GST on hybrid vehicles, which currently attract a high 28% rate. They argue hybrids offer a practical intermediate option given the inadequate EV charging infrastructure presently.

Meanwhile, UP has waived registration charges on certified strong hybrid vehicles under the FAME program. More state incentives are expected. However, Tata Motors and Mahindra & Mahindra urge continued focus on pure EVs, for which they have invested heavily. The current 5% GST on EVs versus 28% on hybrids has benefited these players. They contend diluting EV focus can impact climate goals and the promising domestic EV industry.

To accelerate EV adoption, the industry wants an enhanced FAME scheme successor with a sharp focus on R&D to enable technological advancements locally. Increased production-linked incentives for domestic EV manufacturing are sought to reduce reliance on imports. Budgetary decisions on hybrids versus EVs will have strategic implications for India's sustainable mobility objectives and the future trajectory of this key manufacturing sector.

Budget 2024 Trading Strategy

Stock market investors and traders eagerly anticipate the upcoming Union Budget 2024-25, which Finance Minister Nirmala Sitharaman will present on July 23. As expectations build ahead of the budget announcement, investors assess trading strategies to navigate potential market movements.

The Indian stock markets have shown resilience in recent months, steadily climbing after the Lok Sabha elections amid easing uncertainties and a favourable global environment. According to market experts, key sectors like infrastructure, defence, railways, renewable energy, agriculture, electric vehicles, and MSMEs could receive focused attention in Budget 2024.

Analysts recommend investors to align their trading strategies with anticipated budget priorities aimed at economic growth and addressing sector-specific challenges. Fiscal measures to spur growth, boost infrastructure spending and introduce manufacturing incentives are likely to benefit sectors like infrastructure, defense, renewable energy, agriculture and MSMEs.

Traders are advised to diversify across resilient sectors and identify thematic opportunities in line with expected policy direction. For instance, sustainability-focused sectors like renewable energy and electric vehicles could gain from green policy initiatives.

While details remain to be seen, analysts foresee policy continuity to support capital market growth towards the $5 trillion economy goal. Reforms to attract foreign investment and promote green solutions also appear likely, presenting opportunities for informed investors.

Maintaining flexibility to respond to actual budget announcements will be key for traders. The strategy is to make informed investment decisions aligned with economic priorities unveiled in Budget 2024 for potential post-budget gains.

Budget 2024 for Manufacturing Industry

The “Make in India” and “Aatmanirbhar Bharat” initiatives have created a cascade effect, spurring opportunities across manufacturing supply chains. As Budget 2024 approaches, the industry expects policies that further this momentum.

One focal area is the extension of the concessional 15% corporate tax rate for new manufacturing companies under Section 115BAB of the Income Tax Act. Industry experts underscore that the regime has attracted fresh investments, created jobs and encouraged startups to explore formal manufacturing. With the March 2024 sunset date looming, continuation of this incentive could drive growth.

Expansion of the 15% rate to more manufacturing-linked sectors is also requested. Inclusion of software, design services, packaging material production, toys, leather goods, food processing and electric vehicle manufacturing in the ambit could boost investment. Sectors allied to manufacturing, like testing and simulation, also merit coverage.

Enhancing employment generation incentives is another ask. Increasing the salary threshold for tax deduction from Rs 25,000 per month and extending the deduction period from 3 to 5 years could aid job creation.

Allowing companies availing the 15% rate to also claim R&D expenses deduction would encourage innovation. Further simplification and rationalisation of inverted duty structures and legacy taxes can enhance cost competitiveness.

With China plus one diversification unfolding globally, industry leaders believe a stable, competitive tax regime in the budget could establish India as an alternate manufacturing destination. The upcoming policies will shape the future of Make in India over the next five years.

Budget 2024: Real Estate Sector

The real estate sector has high expectations for the upcoming Budget 2024, looking for measures to boost growth and address key challenges.

According to industry experts, tax revisions, infrastructure development, and industry status are among the major initiatives that can stimulate real estate. Tax changes to reduce property prices and revisions to GST input credit rules are suggested to accelerate demand across asset classes.

Experts state that in addition to traditional demands like single-window clearances, the budget should consider enhancing interest deduction limits on home loans from Rs 2 lakh to Rs 5 lakh. This could drive housing demand across segments. Expanding the definition of affordable housing can also extend tax benefits to more homebuyers and improve affordability.

Allowing tax exemptions on rental income is another recommendation for encouraging real estate investment. Such proposals are seen as crucial for making properties affordable and strengthening demand.

Industry leaders expect progressive budget reforms to meet rising residential and commercial real estate needs. To boost sluggish sales, tax breaks for affordable housing projects are requested. Reviving the credit-linked subsidy scheme to make homeownership more accessible is another key ask.

Overall, the real estate sector is looking for an enabling Union Budget 2024-25 that introduces reforms to unlock demand, spur investments, and meet India's growing housing needs through a focus on affordability.

Conclusion

As the countdown begins for Budget 2024, the policy decisions will have far-reaching implications in shaping India's competitiveness. The budget is keenly awaited for initiatives that can catalyse growth, generate employment, address inequality and pave the path to inclusive development.