Budget 2024: Here’s why experts find the announcements a long-term positive

Despite the dip in the domestic equity market post the Interim Budget 2024 on Thursday, February 1, experts are of the view that the announced measures are likely to spur growth in various sectors, presenting a favourable long-term outlook for investors.

Experts found the Interim Budget in line with their expectations and lauded it for its pro-growth stance while balancing fiscal prudence with substantial capital expenditure. This is positive for the economy and the stock market in the long term.

"In the long run, key sectors poised to benefit include infrastructure, renewable energies, aviation, railways, metros, power, and capital goods, as they receive government support through increased spending," said Harjeet Singh Arora, Managing Director at Mastertrust.

Also Read: Budget 2024 Key Highlights: Income tax, infra, railways, EVs and more - 15 key takeaways from FM Sitharaman's speech

Focus on fundamentals

The government's emphasis on infrastructure, manufacturing, railways, renewable energy, housing, and more aligns with its vision to propel India into a developed nation by 2047.

The Budget 2024 prominently highlighted key initiatives in infrastructure, tourism, logistics, and research innovation, which will collectively foster sustained economic growth.

Finance Minister Nirmala Sitharaman said in her Budget speech on Thursday that the fiscal deficit for the financial year 2024-2025 (FY25) is expected to be at 5.1 per cent of the gross domestic product (GDP). The finance minister also revised the fiscal deficit target for FY24 to 5.8 per cent from 5.9 per cent of GDP. The govrnment intends to reduce fiscal deficit below 4.5 per cent by 2025-26.

Also Read: Budget 2024: Govt pegs fiscal deficit target at 5.1% of GDP for FY25

Moreover, the Finance Minister increased its capital expenditure (capex) allocation for the next fiscal year to ₹11.11 trillion, aiming to enhance India's infrastructure.

The interim budget for the fiscal year 2024-25 (FY25) has allocated ₹11.1 trillion to capex, representing 3.4 per cent of the GDP and an 11.1 per cent rise from the previous year's allocation of ₹10 trillion.

Also Read: Budget 2024: Capex outlay raised by 11.1% to ₹11.11 trillion

As Mukesh Kochar, National Head of Wealth at AUM Capital said, "The Interim Budget seems to be very positive and growth-oriented. It is a well-balanced budget where the Finance Minister has been able to keep the fiscal deficit low along with a focus on growth and welfare measures. The road map which they have created in the last 10 years has been extended further in this budget with a focus on infrastructure, railway, renewable energy, housing, manufacturing, etc."

Also Read: Budget 2024: Govt's lower fiscal deficit target a boost to investor confidence, say experts

This careful balancing act of the government has the potential to keep India on the long-term growth trajectory, creating an optimistic outlook for the nation's economy.

"The interim budget exhibits continuity and stability, emphasising fiscal prudence, infrastructure development, clean energy adoption, and inclusive growth. It lays the foundation for a future-oriented path towards economic prosperity," said Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance.

Pradeep Gupta, Co-founder & Vice-chairman at Anand Rathi Group expects renewed interest among foreign investors due to strong capex and lower fiscal deficit.

"The Finance Minister has continued to focus on strengthening domestic macro factors including sustained investments in infra, agriculture, domestic tourism, and also sticking to fiscal responsibility with a lower fiscal deficit which could be music to the ears of foreign investors as lower budget deficits and pared borrowings will help bring down yields. It could possibly open the door for a ratings upgrade," said Gupta.

Also Read: Budget 2024: Interim budget to strengthen developed India, says PM Modi

Ashwin Patil, Senior Research Analyst at LKP Securities underscored that sticking to the road of fiscal consolidation, the budget has outlined the framework for comprehensive economic growth with infrastructure development through continued capex growth, agriculture sector development and development of the domestic tourism industry.

"With the focus on developing women's power, empowering youth, farmer welfare and poverty alleviation, the budget has laid the foundation for inclusive growth. On the back of increased private investment, the credit availability for the private sector will kick off another cycle of investment and economic growth," said Patil.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.