As the 2024 Union Budget draws near, stakeholders have high hopes for policies that will increase consumption, strengthen domestic production, enhance global competitiveness, and support economic growth.
Below are some of the key expectations from the upcoming budget to be presented on July 23, 2024:
Bolstering Export-Import Landscape
The 2024 Union Budget is expected to introduce comprehensive tax benefits and simplify export procedures with the goal to double FMCG exports by 2026. Providing targeted incentives for organizations meeting international quality standards and facilitating market diversification will enhance India's global market presence, increase foreign exchange earnings, and drive economic growth. Additionally, lifting restrictions on exporting key agricultural commodities such as rice, wheat, sugar, and onions is anticipated to boost production quantities, increase employment, and drive demand for ancillary services in the agricultural sector.
Enhancing Domestic Consumption through Tax Benefits and Rural Development
To stimulate domestic consumption, the government is likely to increase tax benefits, allowances, and exemptions for individuals, alongside allocating a higher budget for the National Rural Employment Guarantee Act (NREGA) scheme. These measures aim to increase the disposable income of the middle and lower-middle-class population, especially in rural areas, boosting consumption and consumer market activity. Higher wages under rural job schemes and increased cash handouts to farmers are also expected to support rural spending and retail consumption. Enhancements in rural housing subsidies, potentially increasing by up to 50%, are also expected to uplift rural consumer sentiment and drive further consumption. Moreover, there is an emphasis on slum redevelopment in major cities, improving access to clean water and sanitation for households, reducing regulatory costs (such as registration fees), and implementing regulatory reforms for automatic approvals in both rural and urban areas.
Economic Stimulation through Tax and Regulatory Reforms
Significant tax reforms are on the agenda, including streamlining capital gains taxes and simplifying the Goods and Services Tax (GST) system. There's also a push for revising the GST rate structure and reducing taxes on specific sectors to make India a more conducive environment for business. Additionally, policies towards insurance for unorganized workers, such as taxi, truck, and three-wheeler drivers, are expected, building on the success of government insurance schemes that have collected significant premiums and paid out substantial claims. Salaried employees will hope for favorable announcements, such as an increase in the income tax rebate and possibly restoring the old pension scheme (OPS). Such measures should stimulate an increase in consumer spending, thereby bolstering economic growth.
Investments in Physical and Digital Infrastructure to Drive Market Growth
The infrastructure sector is expected to see continued focus on the creation and expansion of the rail network, particularly in East and North-East India. For instance, an addition of over 5,000 kilometers of new rail tracks annually over the next few years is predicted. Investments in Agri-infrastructure projects such as cold storage facilities, efficient irrigation networks, grading and sorting units, and food processing facilities are also awaited to boost agricultural productivity and efficiency. Moreover, key stakeholders anticipate allocation of funds or provision of subsidies for greater adoption of emerging technologies like artificial intelligence, and automation in food processing, waste reduction, and crop insurance within the agriculture and dairy sectors. In addition, for the retail sector, we are expecting to see increased investments in digital network creation and measures to control inflation. The government is also anticipated to support the Open Network for Digital Commerce (ONDC) to facilitate a more robust digital marketplace.
