Budget 2024: Bank, HFCs related announcements and how AnandRathi views it to bode for the sector
Union Budget 2024 is perceived to strike a balance between social reforms, growth, fiscal prudence and coalition partners by Deepak Ramaraju, Senior Fund Manager, Shriram AMC. The fiscal prudence is improved and the fiscal deficit is reduced to 4.9% of the GDP from 5.1%. The borrowing is pegged to Rs 14 L Cr which is less than last year. This is positive for the overall economy.
The Union Budget 2024 has tried to be a balanced one- trying to work on the Viksit Bharat theme. Nonetheless, while it is seen as unfavourable for equity investors in the medium term because of the increase of STCG rate, here is how investors in the banking sector stand to be impacted from the announcements made in Budget 2024. Here's a quick take based on AnandRathi's take on the same:
PM Awas Yojana
Subsidy unchanged from that of the interim Budget. The brokerage sees it to be neutral for HFCs
Positive glide path to reduce fiscal deficit
Positive for public-sector banks and NBFCs. India has reduced the fiscal deficit target to 4.9 per cent of GDP in FY25. This lowered fiscal deficit target may enable the company to get a sovereign rating upgrade. This is as with it the country progresses towards its goal of narrowing the deficit to below 4.5 per cent of GDP by fiscal year 2025/26.
Huge allocation for rural development
Positive for MFIs, SFBS, IndusInd Bank and Bandhan Bank. The government has adhered its focus on the rural growth and likewise has increased allocation to agriculture and allied sectors. Also, it has kept the outlay towards the MNREGA scheme steady at Rs 86,000 crore.
Mudra loans
Allocation for good re-payers will be enhanced from Rs1 million now to Rs 2 million.