Budget 2024: Analysts give a thumbs-up to Rs 1 lakh crore innovation fund, increase in capex target. Read on

Budget 2024: Finance Minister Nirmala Sitharaman made key announcements in her Interim Budget speech on Thursday, February 1, covering sectors from infrastructure to tourism.

Here is a look at how the leading names from the different sectors rate the sixth budget of Finance Minister Nirmala Sitharaman.

Mini Nair, Chief Financial Officer (CFO) at Geojit Financial Services, said, "The biggest strength of this budget is the fact that the fiscal deficit is set at 5.1 per cent which is significantly lower than expected."

Additionally, maintaining the focus on infrastructure development and capex is a positive factor. The plan to focus on the rural housing programme will have multiple constructive effects on the economy, as many ancillary industries are linked to housing.

"Another positive factor is the allocation of one lakh crore for R&D and innovation. Overall, this demonstrates a continued focus on fiscal consolidation and macro-economic development," Nair added.

Focusing on the revised estimate of the fiscal deficit, Murthy Nagarajan, Head-Fixed Income at Tata Asset Management, said, "The numbers look realistic as the assumptions are realistic. The capital expenditure is targeted at Rs 11.11 lakh crore, which is lower than the market expectation of Rs 12 lakh crore.

The finance minister stated they want to get a fiscal deficit below 4.5 per cent in 2025–26. This is an anti-inflationary budget in an election year, as the fiscal deficit is reduced from 5.8 per cent to 5.1 per cent. The finance ministry is clearly aiming for a rating upgrade with an aggressive fiscal deficit reduction target as we are at an investment grade rating."

Nagarajan further said that the ten-year yield has come down to 7.05 to 7.08 levels from 7.15 levels. A further drop in yields is expected due to flows from foreign institutional investors and the expectation of India’s rating upgrade.

Meanwhile, Siddhesh Mehta, Research Analyst at Samco Securities, said that the government's move to allocate a corpus of Rs. 1 lakh crore to research and innovation will fortify deep-tech technologies.

"The government announces a golden era for tech-savvy enterprises, setting a corpus of Rs. 1 lakh crore with a 50-year interest-free loan for long-term financing/refinancing. This strategic financial initiative, featuring low to nil interest rates, aims to scale up the private sector's research and development efforts significantly in sunrise domains.

Notably, this infusion is set to fortify deep-tech technologies," said Mehta.

Further, Rajesh Narain Gupta, Managing Partner of SNG & Partners, Advocates & Solicitors, believes that huge incentives for the private sector and a deep focus on infrastructure development by increasing the overall provisions and steps towards rural, women, and farmer development will accelerate India becoming a developed nation.

ONDC on interim budget 2024

"We applaud the government's unwavering commitment to supporting MSMEs post-budget announcement. The acknowledgement of MSMEs' pivotal role in the global market and the focus on fostering a green economy is noteworthy. Recognizing the need for a policy environment tailored to MSMEs' unique requirements is significant. Prioritizing training initiatives for global competitiveness reflects a forward-looking approach. Emphasizing the importance of Digital Public Infrastructure (DPI) as a new factor of production in the 20th century highlights its critical role in shaping a more organized and structured economy. Minister Sitharaman's assurance of preparing the financial sector for investment needs is a welcome commitment. ONDC applauds the government's dedication to fostering inclusive and sustainable development, improving productivity, and creating opportunities for all."

Mukesh Kochar, National Head of Wealth at AUM Capital

The Interim Budget seems to be very positive and growth-oriented. It is well well-balanced budget where the FM has been able to keep the fiscal deficit low along with a focus on growth and welfare measures. The road map that they have created in the last 10 years has been extended further in this budget with a focus on Infrastructure, Railway, Renewable, Housing, manufacturing, etc. Capital expenditure remains high which drives the economy in the long term. A lower fiscal deficit will have an impact on bond yield and the yield of govt securities will come down further which already has reacted to the budget positively with around 8 bps down in yield. The trajectory of fiscal deficit has been kept low which is positive from a rating, FII flow, and currency point of view. Corridor port connectivity will reduce turnaround time hugely and will have a very positive effect on the economy. Although it is an interim budget and final will come out post-election only.

S L Jain, MD & CEO of Indian Bank

"We welcome the positive developments outlined by the Honorable Finance Minister, which underscore the resilience and potential of the Indian economy. The government's focus on infrastructure, including projects for tourism, expansion of Metro Rail and Namo Bharat to more cities, and support for EV manufacturing and charging infrastructure, aligns with the nation's developmental goals. The government is laying the foundation for inclusive urban development by extending support through initiatives like two crore new houses under the PM Awas Yojana Grameen that address the housing needs of the middle class. The vision of Vikshit Bharat 2047 aligns seamlessly with our mission to build a prosperous and inclusive nation. Together, let us embark on this transformative journey, creating a resilient and empowered India for generations to come."

Pradeep Gupta, Co-founder & Vice-chairman, Anand Rathi Group

The FM has continued to focus on strengthening domestic macro factors including sustained investments in Infra, Agriculture, and Domestic Tourism, and also sticking to fiscal responsibility with a lower fiscal deficit which could be music to the ears of foreign investors and the impending $25 billion bond inclusion in June as lower budget deficits and pared borrowings will help bring down yields. It could possibly open the door for a ratings upgrade.

Key features of the budget are a focus on infrastructure, tourism, logistics, and innovation in research. All these measures will bring continuous sustainable growth of the economy. This shows the continued commitment of the existing government to move towards bringing fiscal prudence and reaching to the targeted fiscal deficit of 4.5% of GDP by FY26.

Anurag Mittal, UTI AMC

The budget is distinctly positive for fixed income market. The budget continued its push on public capex while balancing fiscal responsibility. The fiscal deficit target of 5.1% for FY25 was below all consensus estimate & the most positive aspect was gross borrowing number of 14.1 trillion well below market estimates of 15-15.2 trillion.

Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance on the Interim Budget 2024 from a healthcare perspective

"The Interim Budget 2024 reflects a growth-oriented approach, particularly emphasizing the healthcare sector. The extension of health coverage under the Ayushman Bharat scheme to ASHA, Anganwadi workers, and helpers is commendable, especially for enhancing insurance penetration among women and to propel India towards 'Insurance for All' by 2047. Consolidating existing schemes for maternal and child healthcare into one comprehensive program promises smoother implementation. Additionally, the government's initiative to encourage vaccination against cervical cancer among girls aged 9-14 demonstrates a proactive stance toward preventive healthcare. These measures collectively signify a significant step toward safeguarding public health and promoting overall well-being. It sets a prudent foundation for India's robust future.”

Sarbvir Singh, Joint Group CEO, PB Fintech

The transformative initiatives outlined in the Interim Budget 2024 are a monumental leap towards a progressive India.The vision of developed India or Viksit Bharat by 2047 aims to improve people’s capabilities and empower them to build a self-reliant nation. 

The launch of Amrit Kaal heralded a new era of sustainable and inclusive development and steered India towards economic prosperity. By focusing on the welfare and upliftment of key population segments like women, underprivileged, farmers and the youth, we have set a clear roadmap for the country’s development. Embracing the 'Digital India' initiative propels us into a global digital forefront. Our commitment sparks a revolution in connectivity, accessibility, and innovation, paving the way for a tech-powered future. As a country, we continue on the path of fiscal consolidation to ensure that the economy is financially prudent which reflects a positive sentiment for the nation’s economic outlook. Together, these strategic steps fortify our resolve to build India into an innovative and empowered country.

Pankaj Pandey, Head of Retail Research, ICICI Direct

“The Interim Budget has relied on capex-led socio-economic growth template while ensuring fiscal prudence. We highlight that capex growth is on a high base of the last four years wherein it has tripled resulting in a huge multiplier impact on overall economic growth and thus moderation in capex growth is largely on expected lines. The capex to GDP is pegged at an all-time high of 3.4 per cent against 3.3 per cent in FY24. On the fiscal front, the glide path on reducing fiscal deficit has complied with fiscal deficit likely to go down to 5.1 per cent in FY25E vs. 5.8 per cent in FY24. The medium-term target of 4.5 per cent fiscal deficit by FY26 is also on track. The union budget has also further boosted the Indian debt market outlook given the impending global bond index inclusion. Lower than anticipated fiscal deficit and gross borrowing puts the debt market in a sweet spot besides making the proposition attractive for banks, especially PSUs. To sum up, the Union Budget reflects a realistic set of measures to drive growth in Amrutkaal.”

CA Manish Mishra, Founder - GenZCFO

"The extension of tax benefits for start-ups and sovereign wealth funds/pension funds investments, along with the withdrawal of outstanding direct tax demands, reflects the government's commitment to fostering economic stability and encouraging investments. The continuity in tax rates for both direct and indirect taxes, including import duties, provides businesses with a predictable environment. Retaining the corporate tax rates at 22 per cent for existing domestic companies and introducing a lower rate of 15% for certain new manufacturing companies promotes industrial growth. Overall, these measures in the Interim Budget 2024 aim to ensure tax continuity, ease the financial burden on businesses, and stimulate economic growth."

Achala Jethmalani, Economist at RBL Bank

“The fiscal consolidation is premised on an improved Revenue-Capital expenditure mix of the government along with fairly conservative tax and Nominal GDP assumptions. FY25 fiscal figures make the budget fiscally prudent, but not fiscally austere in nature. The fiscal consolidation and the commitment to reach the fiscal deficit-to-GDP levels of 4.5 per cent by FY26 augur well for economy and the rates market, in particular.”

Arun Shukla, President and Director, JK Lakshmi Cement

"JK Lakshmi Cement applauds the Honourable Finance Minister, Nirmala Sitharaman, for crafting the visionary Union Budget 2024-25, a blueprint that aligns profoundly with our ethos of inclusive development. As a stalwart in the cement industry, we welcome the Government of India's commitment to fostering growth, sustainability, and inclusivity. The Government's strategic focus on all forms of infrastructure, be it digital, social, or physical, and a strong emphasis on women's empowerment, resonates with our forward-looking mission. As a key player in the cement sector, we are eager to contribute meaningfully to the strategic railway corridor programs, particularly those targeting energy, mineral, and cement corridors. As we navigate the next five years of unprecedented development, JK Lakshmi Cement remains steadfast in its commitment to supporting the Government's vision of a Vikisit Bharat by 2047 and contributing to the nation's journey towards economic excellence while creating opportunities for all."

Navneet Munot, MD & CEO, HDFC Asset Management Co. Ltd

Commitment to fiscal consolidation and focus on supply augmentation bolster macroeconomic stability and spell good news for bond markets and debt mutual funds. In equity markets, long-term investors will take the budget positively while the near-term direction will depend on global cues, incoming data, and earnings trajectory.

Ashish Singhal, Co-Founder and Group CEO, Peepal Co

"The markets are showing positive growth, retail activity is increasing, and there is clear regulatory progress happening worldwide. However, due to it being an election year in India, the Interim Budget had limitations that prevented the necessary tax adjustments for the sector. At a broader level, the Budget is a statement of intent. From Skill India Mission to Startup India to Digital India, the growth engines of the country have been cranked up with special schemes and financial outlay. The corpus of Rs 1 lakh crore long-term loans to encourage innovation in sunrise sectors and the renewed commitment to developing deep technologies will be the GDP multipliers for the coming decade."

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