Budget 2024: Nirmal Bang Equities expect some push back on bringing products like Oil & Gas, Alcohol under GST regime

Budget 2024: Expectations have been building on Oil and Gas products as natural gas likely to be brought under (GST) Goods and Service Tax regime. The infrastructure push is also being expected to continue

Nirmal Bang Institutional Equities nevertheless says that “With states attempting to shore up with own tax revenues to rein their fiscal deficits, we expect some push back on bringing products like Oil & Gas and Alcohol under the GST regime” . In FY24, state finances did not improve much, and the Nirmal Bang expects overall state deficit is probably going to be higher than 3% of GDP.

Capex & infra focus expected to continue and private capex push also is likely: Nirmal Bang economists expect continued emphasis on increasing the domestic manufacturing base, including rationalising inverted duty structures and potentially additional incentives for private capex & employment generation. This even could entail adding new industries to the PLI program or modifying the current production linked incentive (PLI) schemes.

Some support to the MSME sector is also being anticipated. Clean & Green technologies and the surrounding ecosystem are likely to remain in focus as well. The push for the indigenization of defense and defense exports is also anticipated to continues. Research and development incentives are also probably expected looking at the expansion of Global Captive Centers in India.

Other key expectations include-

Fiscal deficit being maintained at 5.1% of GDP - same as in the interim budget. While the higher-than-expected dividend from the RBI does provide some room for fiscal consolidation to 4.9% of GDP, that is not Nirmal Bang's base case.

Stimulus for slowing consumption- Although the emphasis on capital expenditures will not change, there will inevitably be some reallocation of spending to stimulate slowing consumption.

Tax exemption for middle class- Anticipation is for the tax exemption threshold for the middle class to be increased and also increasing PM Kisan Scheme allocations to the rural and agricultural sectors.

Incentives for private capex, including employment generation, push for domestic manufacturing (eliminating inverted duty stricture), clean & green tech and affordable housing are all expected to see sustained focus with renewed vigour.

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