The Interim Budget for this year will be presented by Finance Minister Nirmala Sitharaman tomorrow, on February 1, 2024. This year’s budget is classified as an Interim Budget 2024 Expectations due to the impending Lok Sabha elections.
Interim Budget 2024 Expectations
Tomorrow, on February 1, 2024, Finance Minister Nirmala Sitharaman is scheduled to deliver the Interim Budget 2024 Expectations. The budget for this year is classified as the Interim Budget because of the impending Lok Sabha elections.
MSMEs seek regulatory process simplification as well as better access to loans and financial support, while salaried taxpayers anticipate changes in income tax slabs, modifications to the standard deduction, and limits on Section 80C to potentially improve tax relief.
Following the election of the new administration, the comprehensive budget for 2024 will be presented. On the other side, the middle class wants policies that will increase access to housing programs, healthcare, and work possibilities.
Investment Strategy Ahead of Interim Budget
When the Interim Budget 2024 draws near, evaluating index valuations is essential to make wise investment choices. Ignoring this factor may result in erroneous beliefs about the state of the market, which could lead one to conclude that it is overpriced and inappropriate for investment.
The Price-to-Earnings (PE) ratio for the Nifty is currently 23 and the PE for the next year is 19. This indicates a potential 24% discount to fair value, as measured against the 33-year average PE of 25.
Furthermore, the valuation offers an appealing investment opportunity with expected returns of between 25 and 30 percent, and a strong GDP growth rate of 7.3%.
When will the interim budget be replaced?
After the elections that are set for April and May of 2024, a new government will be formed, and the interim budget will be replaced.
The government has been gradually reducing the budget deficit to keep debt under control after it spiked to 9.2% of GDP during the pandemic.
It is expected that the current fiscal year, which ends in March, will meet its 5.9% deficit objective. The target will be further cut to 5.3% in the following financial year.
Interim Budget 2024 Changes
There won’t likely be any significant announcements in this year’s interim budget, despite strong anticipation. The following five items are unlikely to be mentioned in the announcements:
Major policy changes
It is unlikely that the finance minister will propose any significant policy or financial adjustments, given the temporary character of the interim budget and the nearness of national elections. Nirmala Sitharaman has already stated that the budget will mostly deal with short-term expenses as opposed to long-term economic plans.
Income tax relief
Large-scale tax reforms are usually saved for fully funded budgets. As a result, people and businesses hoping for large tax breaks or overhauls may have to wait until the full budget is unveiled later in the year.
New welfare schemes
While social sector initiatives will be prioritized, it is unlikely that new, extensive welfare programs would be introduced under the interim budget. Such programs would necessitate large financial outlays best left for a thorough budget discussion after the elections.
Aggressive fiscal consolidation
While lowering the fiscal deficit is the desired outcome, significant fiscal consolidation policies might not be implemented. Since the interim budget is intended to preserve economic stability rather than impose strict budgetary discipline, it is not the place for bold financial manipulations.
New financial regulations
It is not the time to introduce intricate regulatory frameworks or make significant changes to financial regulations during the interim budget. Usually, when making such policy decisions, a full budget is available, which allows for greater discussion and long-term planning.
Interim Union Budget 2024 Expectations and Challenges
Now, everyone, be sure to block off February 1, 2024, on your calendars, as that is when Union Finance Minister Nirmala Sitharaman will present the budget for the fiscal year 2024–25 to us.
Expect nothing too spectacular, but there could be some nice bargains for the rest of us common people in the form of jobs, income tax breaks, and assistance for our elderly residents.
As we go for that tasty $5 trillion economy target, the fintech community has certain expectations as well for the economic picture from this interim budget. One item that is offered during an election year is the interim budget.
With that humility, they offer a budget that will barely be enough to fund the government until the general election, when a new one will be created.
Additionally, they frequently state that some of the plans they outline are subject to change if they are included in the next administration. When it is presented in the Lok Sabha on February 1st, it is referred to as a budget vote on account.
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