Interim Budget 2024 picks: Sunteck Realty, UltraTech Cement could give 20-40% return in 1 year
Government of India (GoI) will present the Interim Budget 2024-25 on 1st Feb’24 (Thursday). Although the Budget presentation is only one part of managing public finances, it attracts significant attention.
Based on provisional data available for 8MFY23 (Apr-Nov’23), our calculations suggest that gross taxes can exceed budget estimates (BEs) for the third consecutive year, by as much as INR1.3t in FY24.
Due to higher non-tax revenue receipts, such as dividends, coupled with higher devolution to states and an expected shortfall in divestments, there is a projected over-achievement of INR1.1t in total receipts in FY24.
According to the first supplementary demands presented on 6th Dec’23, the GoI has sought to authorize an additional cash outgo of INR584b in FY24, largely because of higher subsidies and defense services.
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Nevertheless, it is likely that total spending will exceed FY24BE by INR700-800b, led by higher NREGA spending. If so, the fiscal deficit will be INR17.6t in FY24, lower than the target of INR17.9t, but at 5.9% of GDP, as per the BEs (due to lower nominal GDP growth of 8.9% vs. BE of 10.5%).
Notwithstanding the fact that the 2024-25 Budget will be an interim budget, the most important thing to look out for would be if the fiscal deficit target will be kept at 5.2% or 5.4% of GDP (assuming 10.5% growth in nominal GDP).
A target of 5.2% of
