Interim Budget 2024: Prudent, not populist budget, say industry experts

Finance Minister Nirmala Sitharaman presented the last Budget before the country goes to the polls. Being the Interim Budget, there were no major announcements, however, there was still much cheer, with Agriculture, Infrastructure (including housing) and Green ecosystem as the key thrust areas. The Finance Minister also provided growth impetus for the EV sector, as well as for the start-up, Digital, AI, new-age technology sectors. During her Budget speech, Sitharaman stated, “Digital India is key to formalising the Indian economy”, thus emphasising the Government’s commitment to put Digital on the fast track of growth.

A cross-section of industry leaders shared their insights on the implications of the Interim Budget 2024 and what groundwork it lays for the main budget, which is expected to be presented in July this year after the election of the new government.

Trideep Bhattacharya, President & Chief Investment Officer - Equities, Edelweiss MF:

“In an election year, the Budget adeptly strikes a balance, prioritising sensibility over populism. It showcases India’s unwavering commitment to infrastructure development, coupled with a steadfast adherence to fiscal prudence. This paves the way for sustained growth, steering the nation along the trajectory towards achieving a developed economy by 2047.”

Sahil Chopra, Founder & CEO, iCubesWire:

“The Government’s strategic focus on harnessing new-age technologies and data underscores a transformative approach towards fostering an innovative ecosystem in India. The commitment to providing incentives and support in sunrise sectors is a significant leap forward in empowering start-ups and entrepreneurs across the nation. With the establishment of a substantial financial corpus for long-term, low-interest financing, start-ups will find a robust backbone for investing in research and innovation.

Furthermore, the launch of a new scheme to promote deep-tech technologies, especially for defense and self-reliance, opens up vast avenues for start-ups to contribute to critical national interests. This visionary move is poised to accelerate the growth of start-ups, stimulate technological advancements, and unlock new economic opportunities, marking a new chapter in India’s journey towards becoming a global innovation hub.”

Abhinav Jain, Co-Founder & CEO, Almonds AI:

“The Government’s forward-looking Budget aligns remarkably well with the impetus required for the AI and technology sectors. The focus on digital infrastructure lays a robust foundation for innovation, and the commitment to skill development among youth mirrors the mission to empower the next generation with AI capabilities. The support for electric vehicles and clean energy initiatives resonate with the Green Loyalty Program, reinforcing belief in sustainable technological advancement.

This Budget not only catalyses a tech-driven economy, but also heralds a golden era for companies like ours at the intersection of AI and market technology. We are eager to contribute to this transformative journey and commend the Government’s vision for a tech-empowered, inclusive growth trajectory.”

Chirag Mehta, CIO, Quantum AMC:

“There was an expectation that given it’s an election year, the Budget could tilt more populist with more support for rural sector. However, contrary to expectations, the Government continues to be driven by development and fiscal prudence as the central focus. Given the economic growth momentum, there was need for assuring macroeconomic stability, which has been judiciously crafted to give way for fiscal consolidation. The lower tax collection assumption could either be conservative or government signal to assume some growth moderation going forward.

The government continues its capital expenditure spending with on Inclusive development with Agri, Infra (including housing) and Green ecosystem as the key thrust areas with an emphasis on Research and Technological developments. There was a need to support manufacturing momentum and way to revive rural economy. However, probably that could be part of the main budget that gets presented in July as the Government plans to showcase a pathway for Developed India.”

Pankaj Pathak, Fund Manager - Fixed Income, Quantum AMC:

“This is a very good Budget for the bond market as the Government chose fiscal prudence over populist spending. The budgeted fiscal deficit of 5.1% of GDP is lower than even the lowest of market estimates. Faster fiscal consolidation and consequent decline in the Government’s market borrowing should drive bond yields lower and bond prices higher. Another positive aspect is that the Government has pegged only a moderate growth in the non-capex expenditure. This should keep inflation under check and provide enough headroom to the RBI to cut interest rates. We expect long term bonds to do well in 2024. Investors can capture this opportunity with dynamic bond funds which are invested in long term bonds.”

Alok Kashyap, Founder and CEO, Yatiken Software Solutions:

“In line with the Government’s ambitious vision of technology contributing 20-25% to the GDP by 2025, this forward-looking Budget charts a promising course for the IT sector. The allocation for EV infrastructure development is particularly noteworthy as it opens avenues for software development in EV systems, IoT integration, and data analytics. The 1-lakh crore corpus for long-term financing is another indispensable boon for the IT industry, fostering innovation and research. Moreover, the Skill India Mission’s initiatives and tax benefits for start-ups provide a robust foundation for skill development and entrepreneurial growth.”

Shiwang Suraj, Director & Founder, InfraMantra:

“The Budget’s plan to build two crore more houses in the next five years is a big step to help low and middle-income people in India find homes. With a new program to help middle-class people own homes, we are seeing big changes in housing. These efforts show how important it is for everyone to have a home and how new ideas in building can make our cities better places to live.”