Union Budget 2023: Consolidation exercise from FM; top 10 takeaways

FM Nirmala Sitharaman’s latest Budget is the last full Budget by the NDA government that was not populist as some feared but continued on the path of fiscal prudence with minimal changes in tax proposals reflecting the government’s thrust on stability in the tax regime.

Attempts to consolidate the fiscal situation and push growth are visible.

The nudge to the new tax regime has gained momentum offering relief for those who opt for it.

Here are 10 takeaways from Budget 2023:
1) HNIs:HNIs have impacted both ways – reduction in peak surcharge rate benefitting them (if they opt for the new regime) while capital gains and MLD limits could hurt them to an extent.

2)Real estate companies:
Real estate companies in the affordable segment could benefit while those in the ultra-high value segments could get impacted.

3)Life insurance companies:
Life insurance companies could get hurt as the savings plan collection could come down while the shift to the new tax regime may not materially hurt their core insurance business.

4)Railway sector:
An increase in capital expenditure and Railway capex is a welcome measure that could trigger a lot of other investments by the private sector and stimulate income growth.

5)Bond street:
Bond Street is relieved due to borrowing estimates coming within expected levels.

6)Reduction in subsidies:
A reduction in subsidies (both food and fertiliser) by 28% is welcome though it could have an impact on consumption spend.

7)Lower tax collections:
Lower tax collections growth projected (10.5% vs 17-17.5% in FY23) means that the growth in nominal terms in FY24 could be slower affecting the corporate earnings growth.

8)Fiscal consolidation:
The pursuance of fiscal consolidation by projecting a lower fiscal deficit of 5.9% for FY24 will be welcomed by global credit rating agencies.

9)Investment avenues:
Recent macro numbers including Core Infra, GST collections, IIP, Inflation etc show that the economy is on the path to accelerated growth. The new savings scheme and enhanced limit of the Senior Citizen savings scheme affords more avenues for savers to invest their monies safely and productively.

10)Way ahead for markets:
The stock markets will now look forward to the other triggers for moving from now on – the US Fed meet outcome, RBI MPC meet outcome, and the balance Q3 corporate results.

China post the reopening has been attracting more FPI funds and negative newsflow on an Indian corporate group has impacted sentiments across.

Revised FY24 earnings forecasts for corporates and the Nifty could drive the markets over the next few quarters.

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