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Though an immediate tax hike is not expected, considering elections, some post-election measures such as higher capital gains tax are possible during the year, global broking firm Jefferies said in a report.

Disinvestment may also get ramped up post-elections, partly as the government capitalizes on the sharp run in PSU stocks in sectors such as railways, defence etc, the report said.

Some other measures to watch out for are a potential hike in the FPI limit in banks/insurance companies to 100 per cent (from the current 74 per cent) and PSU banks (20 per cent FPI cap to facilitate IDBI privatisation). Tobacco taxation changes are unlikely in the interim budget but the July budget will be more important for these changes, it added.

Divestment (via stake sale) target - Defence and rail PSUs and the privatisation candidates include Concor, BEML, IDBI, and SCI.

Other specific details to watch out for are any significant boost to rural infra/welfare schemes (housing-for-all, village roads, income transfers) - a sentimental positive for cement/rural recovery, the report said.

Renewed Interest subvention scheme for affordable/mid-income housing likely.

The recent state elections showed that income transfer/welfare schemes have been key to campaigns; including for the BJP. Ahead of the 2024 polls, while a large new scheme is possible, some existing popular schemes may also get expansion / extra resources such as Farmer income transfer, Housing for all, health insurance etc. Overall, we expect the social spending of government (ex subsidies) to rise by 7-8 per cent in FY25E against a 4 per cent increase in FY24E, the report said.

"The post-election FY20 budget had only minor adjustments from the Interim Budget presented in Feb19. Our analysis shows that revenue/expenditure and fiscal deficit estimates in the later budget were within 1ppt / 10bps of the Feb19 one. The major announcements of 2019 viz. the welfare scheme for farmers (income transfer of Rs750bn) were announced in the interim budget itself. We expect a continuation of the precedent for the 1st Feb 24 budget," the report said.

The government has "committed to a process of deficit reduction post-Covid (announced in Feb 22), and has cut the fiscal deficit from the Covid high of 9.1 per cent of GDP in FY21 to 5.9 per cent by FY24E. A further reduction of 1.4ppt is planned over FY24-26E to 4.5 per cent of GDP".

"We estimate FY25E fiscal deficit target at 5.2 per cent of GDP. Assuming the tax revenue growth at 12.5 per cent (similar to FY24E, driven by 11 per cent nominal GDP and 15 per cent corporate earnings growth); the total expenditure growth would have to be limited to 7-8 per cent (vs. 9 per cent in FY24E)," the report said.