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    Budget 2023: 80C limit could be raised by FM to improve savings

    Synopsis

    The capital expenditure target can be raised to Rs 9-9.5 trillion from Rs 7.5 trillion set for FY23. It will significantly improve the infrastructure spending and enhance the business for other elide sectors such as cement, metals and capital goods.

    Budget 2023: 80C limit could be raised by FM to improve savingsETMarkets.com
    Against the backdrop of a global growth slowdown and geopolitical uncertainty, the FY2024 Union Budget needs to balance supporting growth in economic activity and fiscal consolidation.

    The capital expenditure target can be raised to Rs 9-9.5 trillion from Rs 7.5 trillion set for FY23. It will significantly improve the infrastructure spending and enhance the business for other elide sectors such as cement, metals and capital goods.

    The infrastructure sector expects the government to continue taking steps toward achieving the Gati Shakti and NIP targets. The capital expenditure is expected to be increased by 15-20% from Rs 7.5 trillion in FY2023 BE.

    A major focus is expected to be on key infrastructure segments like roads, railways, and urban infrastructure.
    The government’s policy on capex is a key driver of steel demand from the infrastructure vertical. In the last three years, the government’s capex has been surging at a compounded annual growth rate (CAGR) of over 30%.

    In FY2024, maintaining the momentum in the government’s capex drive will be a key factor, which can partly insulate the domestic steel industry from the full effect of the ongoing global growth slowdown.

    The Indian textile industry witnessed a roller-coaster year, with a huge demand upswing in FY2022 to a sharp increase in raw material prices (cotton) in H1 FY2023.

    The slowdown in developed economies has cast a shadow on the textile export market. Green shoots of recovery can be seen in the recent trade agreements signed/initiated.

    The FTA with Australia should open a lucrative export market for garments, and the proposed trade agreement with the UK should level the playing field with another large textile-exporting neighbor.

    The FY2024 Budget is expected to have a continued focus on the farm sector, including a focus on initiatives to improve crop realizations and non-farm income.

    With agriculture remaining the focus, the agri-input sector i.e. agrochemicals, fertilizers, etc. are expected to benefit.

    The PLI scheme is limited to large and mid-corporates and can be extended to MSMEs. MSMEs are the 2nd largest employers and provide employment to 110 million people.

    Extension of such schemes to MSMEs will improve productivity and exports.

    LTCG up to Rs 1 lakh is exempted from income tax, while STCG is only adjusted under the basic exemption limit of individual income tax, which is Rs 2.5 lakh. STCG can also be allowed with some tax exemption limits.

    80C limit could be raised to improve savings, which will indirectly reduce extra spending and inflation.

    Fiscal deficit target can be lowered by 50-60 bps from 5.9% in FY23 to 5.3% in FY24.

    (The author is Head of Research, Ventura Securities)

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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