Ahead Of Budget, Mehta Equities Predicts Positive Outlook For Indian Economy

The Indian economy is projected to maintain a positive outlook as the Union Budget 2024-25 approaches, driven by optimistic sentiment in the stock markets and a robust performance on Dalal Street. The Nifty has reached a record high, reflecting investor enthusiasm ahead of the budget presentation.

Finance Minister Nirmala Sitharaman is set to present the budget on 23 July, with expectations running high for substantial economic reforms. The budget is anticipated to reflect the reforms promised by the BJP government, aimed at sustaining investor confidence and supporting economic growth.

Mehta Equities, in its latest report, highlights India's recognition as a 'bright star' in the global economy, with a projected Gross Domestic Product (GDP) growth rate of 7 per cent for the current fiscal year, the highest among major economies. The report also notes a significant rise in Goods And Services Tax (GST) collections, from Rs 8.63 lakh crore in FY16-17 to Rs 18.45 lakh crore in FY23-24, alongside improvements in various economic indicators such as inflation, foreign exchange reserves, and industrial growth.

The Union Budget is expected to focus on job creation, capital expenditure, manufacturing, infrastructure, and the rural economy, while also addressing fiscal stability and deficit control. Mehta Equities suggests that the government should signal a move towards a fiscal deficit target of 4.5 per cent of GDP by FY26 and provide incentives to various sectors, including healthcare, agriculture, and real estate.

Automobile Sector:
Mehta Equities expects the Union Budget 2024-25 to give a significant boost to the automobile sector, recognising its crucial role in the Indian economy. The report suggests that the government might introduce policies aimed at promoting electric vehicles (EVs), reducing GST on automobiles, and increasing incentives for manufacturing and research in the EV sector. Additionally, there may be an emphasis on improving infrastructure for EV charging stations across the country.

Infrastructure Sector:
The infrastructure sector is likely to be a primary focus of the budget, with substantial allocations expected for road construction, urban development, and rural connectivity projects. The government is also expected to introduce measures to streamline project approvals and enhance public-private partnerships (PPPs).

Financial Sector:
For the financial sector, the budget is expected to bring in reforms to strengthen the banking system, improve credit flow, and address non-performing assets (NPAs). Mehta Equities predicts that the government may increase capital infusion in public sector banks, introduce measures to boost digital banking and incentivise fintech innovations. Additionally, there could be efforts to simplify regulatory frameworks and encourage foreign investment in the financial sector.

Real Estate And Housing Finance Companies:
The real estate sector, including housing finance companies, is anticipated to receive favourable policy announcements. Mehta Equities suggests that the budget may include tax incentives for affordable housing, extension of benefits under the Pradhan Mantri Awas Yojana (PMAY), and relaxation of norms for real estate investment trusts (REITs). There might also be measures to boost liquidity for housing finance companies and facilitate easier access to home loans for buyers.

Budget Outlook For Railways:
The Indian Railways is expected to be a significant beneficiary in the Union Budget 2024-25. Mehta Equities foresees increased budgetary allocations for modernising railway infrastructure, enhancing passenger amenities, and expanding the rail network. The government may announce new high-speed rail projects, upgrade existing lines, and introduce measures to improve safety and operational efficiency. Additionally, there could be initiatives to promote private sector participation in railway operations and infrastructure development.