India Financial News

First Triveni of fiscal discipline

Nirmala Sitharaman presented her seventh and Modi 3.0's first union budget in the Parliament, Congress paid tribute to former Prime Minister Manmohan Singh for his contribution in ushering India into a new economic era.

«So, all of these contours or making India a product nation, these perspectives I think were very useful from the budget as well. Some of the clarity, the fleshing out of these medium-term plans should start becoming visible,» says Neelkanth Mishra, Chief Economist, Axis Bank. Let us just begin then with the overall outlook this time around with respect to the Budget and the finance minister clearly retaining the FY25 capex target at about 11.1 lakh crore rupees. How do you believe that one should be reading into the fine print? Neelkanth Mishra: This was the first budget of a new government, so there were two major asks from it or at least two major signals that we were all looking for. One was will the direction of the fiscal maths change? There was I think apprehension among some quarters that the government because of the election verdict would change its stance, so at least on the budget arithmetic it is very clear that the government sticks to the focus on macroeconomic stability on a very relentless focus on bringing down the cost of capital over the medium term and I think some of those changes will start becoming visible in the next year or two.

revenue growth, said a Media Partners Asia report.

real estate sector has cautioned the government that the proposal to remove indexation benefits for long-term capital gains in real estate will hurt the growth of the sector.

Thyrocare Technologies shares jumped 16.75% to their fresh all-time highs of Rs 759 on the BSE after the company posted 46% YoY jump in profit after tax to Rs 24.7 crore for the first quarter ended June 2024. The company’s consolidated revenue has increased 16% year-on-year to Rs 157 crore for the first quarter of FY25 while the gross margins stood at Rs 100.7 crore, up from Rs 87.7 crore in the corresponding quarter of the previous year. This is an increase of 15% YoY.

₹1.25 lakh per year will soften the blow, but only to a miniscule extent. India is a developing country where most of the savings are still parked in fixed assets. Mutual fund penetration is around 15% against the global average of 75%.

₹1,000 crore venture fund for startups will further give a fillip to the country’s promising space sector, encouraging deeper public-private relationships. Changes to the Insolvency and Bankruptcy Code (IBC) are on the cards, with the setting up of additional tribunals to tackle pending cases and enhance the speed of the resolution process.

On 3 July, the BSE Sensex, India’s most famous stock market index, crossed 80,000 points for the first time during the course of a day’s trading. On 4 July, the Sensex closed above 80,000 points for the first time. When you have followed the Sensex for as long as I have, such occasions lead to random thoughts—or what in slightly technical terms can be referred to as the benefits of experience.

Indian Prime Minister Narendra Modi plans to raise spending to create more jobs and spur economic growth

Ajit Ranade: An overdue pivot to human capital and employment There was also a reference in the budget speech to the need to simplify rules for FDI and ODI, and to promote the Indian rupee as a currency for overseas investment. While the FDI and ODI policy has been liberalised over the years, including through notification and regulations announced in August 2022, some aspects remain grey, such as whether portfolio investments are indeed permitted or not under ODI. Also, some substantive aspects (and indeed, procedural aspects) are difficult to deal with at the ground level, and one hopes that these will be addressed expeditiously.

Viksit Bharat in the full budget. Overall, the Budget 2024 has been an inclusive one, listing out nine priority areas. In fact, inspired by Prime Minister Narendra Modi’s vision, FICCI’s four priority areas, namely manufacturing (Make in India), farm-led growth, women-led development and sustainability, closely mirror the thrust areas highlighted in the budget.

The budget has proposed adjusting the tax slabs under the new tax regime to make it more appealing to taxpayers. The standard deduction has also been proposed to be increased to Rs 75,000 from Rs 50,000 under the new regime. These tweaks will help salaried employees in the new tax regime save up to Rs 17,500 in income tax, Finance Minister Nirmala Sitharaman said in her budget speech.

Union Budget: The recent budget announced by finance minister Nirmala Sitharaman brings relief to consumers by reducing customs duties on various imported goods, making luxury items and essential commodities more affordable.

Union Budget, Indian benchmark equity indices opened marginally lower on Wednesday, weighed down by index heavyweights Reliance Industries, banking, and financial stocks. The BSE Sensex was trading 37 points, or 0.05%, lower at 80,396. The Nifty50 was down 28 points, or 0.11%, trading at 24,451 around 9:20 am.

«Now, whether the short-term capital gains tax, short-term transaction tax increase, will it necessarily act as a disincentive for speculative activity or not, obviously one measure is not adequate and if you are looking for gains in hundreds and 200% because of the embedded leverage in derivative assets, you are not going to be swayed by a small increase in the short-term transaction tax,» says V Anantha Nageswaran, CEA. Well, you pointed out in the Economic Survey that a lot of experimenting is happening as far as the investment in the stock market is concerned and today, we saw the LTCG and short-term capital gains, the tweak there. What is your thinking as far as, from here on the stock markets or investment in stock markets is concerned as far as this? V Anantha Nageswaran: Look, I mean, I am not in the prediction business for stock markets.

fiscal prudence and whether the budget would indicate a populist turn by the government. However, the message is that of continuity. Apart from the increased allocation of resources to the states of the two coalition partners, there does not seem to be any meaningful difference between the earlier budgets and the current one. The government continues to be on the path of fiscal prudence and consolidation. There is an emphasis on employment, skilling, and the social sector, and rightly so. There has been some worry about economic growth not fully translating into employment growth. Given the increasing number of young Indians joining the workforce, it was important to address the skilling needs of the people and incentivise the companies to hire more freshers. Encouragement for domestic manufacturing and services continues and the measures announced were on expected lines.

Stocks that were in focus include names like Indian Hotels, which gained 0.79%, JSW Steel, which rose 0.61%, and BPCL, whose shares declined 0.73% on Tuesday.

Delhi-NCR experienced a heavy spell of rain, bringing much-needed relief from the persistent humid weather. The India Meteorological Department (IMD) issued a yellow alert for the national capital and surrounding areas, indicating the possibility of more showers throughout the day. A yellow alert signifies heavy rainfall between 6 cm and 11 cm.

«See, in a country like India which is not a rich country, you have to continuously find avenues to tax and you have to use the tax revenues in the right way and continue the growth momentum and you have to ensure that jobs are created,» says S Naren, ED & CIO, ICICI Prudential AMC. What is your take on budget? S Naren: See, the government over the last decade has managed macro very-very well. Every year, they have looked and seen which are the areas where they can actually afford to increase taxation and not hurt the sectors. So, I think they have done a brilliant job if you look at it. The market can absorb it. Otherwise, the market reaction today would have been quite different, that is the reason why it is a great budget at this point of time.