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Below the Views on the Interim Budget 2024 of Mr. Amar Ambani, Executive Director, YES Securities

"In a short budget speech, usual for an interim budget immediately preceding general elections, the FM largely traversed on a sustained development trajectory. The Budget is largely non-populist, given that there is barely any change in Budgeted subsidies for FY25, uncharacteristic of an Interim Budget ahead of the national elections. The policy intent was crystal clear as seen through the selective allocation of resources, with stronger emphasis on sectors of rural and middle-class housing and Green Energy.

Clearly, the biggest plus for the market was the aggressive fiscal deficit target of 5.1% for FY25 versus expectation of 5.5%. Our own view was closer to the government stance, that it will target an aggressive number for FY25. The commitment to achieve a 4.6% fiscal deficit in FY26 seemed imperative, given the inclusion of Indian bonds in global indices.

The improving fiscal deficit scenario is largely based on the government's expectation of continued tax buoyancy, higher dividend from PSUs and RBI, and much tighter control on central expenditure. Consequently, market borrowing in FY25 is projected lower than FY24 levels, in what’s a huge positive for the private sector borrowing and bond market yields. We fancy RBI soon changing its stance on monetary policy from the “Withdrawal of Accommodation” to “Neutral”.

Other standout features include the incremental target of two crore affordable homes under the PM Awaas Yojana Gramin in next five years, with three and a half crore homes already nearing completion.

The government infra push continues unabated, albeit at a slower pace versus market expectation. Our view again here was that the government spending growth of 12% is reasonable, as the private sector capex would gather momentum. Further, granting sustained interest free loans to states and urging them to spend on capex will have a bigger multiplier effect on growth. Notably enough, the budget was strong on rail infra within overall infra.

Along expected lines, we saw the status quo maintained on direct tax, indirect tax, including import duties.

The missed announcement was around manufacturing and PLi. While we saw some subsidy hike, no material sops were announced, since income support to farmers in the last instance was introduced just prior to the general election and a flurry of subsidies were given, in various forms since Covid, including distributing food grains."

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