Budget 2024: Government Expected to Unveil Sops for Middle Class and Rural Segments, Says Rupen Rajguru of Julius Baer India
New Delhi, January 31, 2024(Budget 2024)
As anticipation builds for the upcoming Interim Budget, Rupen Rajguru, Head of Equity Investments and Strategy at Julius Baer India, foresees a focus on fiscal balance improvements and increased social spending. In an exclusive interview with Mint, he shared insights into the expectations surrounding the budget, highlighting potential measures for the middle class and rural segments.
Interim Budget 2024 Expectations:
Given that 2024 is an election year, the Interim Budget or Vote on Account is slated for February, with a comprehensive Budget anticipated in July post the new government’s formation. Rajguru emphasizes that being an interim authorization, the Interim Budget might not witness major tax or policy reforms.
Fiscal Balances and Social Spending:(Budget 2024)
Rajguru anticipates better fiscal balances in the Interim Budget, creating room for augmented social spending. The government’s inclination towards announcing incentives for the middle class, such as promoting a new income tax regime and focusing on housing, is also expected.
Market Perspective:
While major policy reforms may not be on the horizon, Rajguru suggests that the Interim Budget will serve as an opportunity for the government to highlight its economic achievements leading up to the 2024 General Elections. Markets are likely to respond positively to announcements emphasizing quality spending, with a focus on capital expenditure over revenue expenditure, and a commitment to fiscal discipline.
Short-Term Market View:
Reflecting on the market outlook, Rajguru points out that the calendar year 2023 was eventful, with Indian markets delivering a substantial return. The structural story for India, encompassing earnings, capital expenditure, and credit growth, remains robust. Despite potential volatility in H1CY24, the market’s momentum is expected to continue, driven by earnings cycles and strong domestic liquidity.
US Fed Rate Cut:
Regarding the US Federal Reserve’s rate cut, Rajguru acknowledges the boost provided to global equity markets. While anticipating a gradual reduction of rates, he emphasizes that a less aggressive and delayed rate cut by the Fed could lead to intermittent risk-off periods and market volatility.
Impact of US Economic Slowdown:
Addressing concerns about a slowdown in the US economy, Rajguru suggests that a soft landing is more likely than a recession. He highlights the supportive factors of corporate earnings momentum and the reversal of the rate cycle, making the outlook for global equities and FPI flows positive.
Q3 Earnings Overview:
As the Q3FY24 earnings season unfolds, Rajguru observes early trends. Sectors such as financials, consumption, IT, cement, healthcare, and industrials show varying performances. Overall, the earnings season is expected to align with estimates, with companies maintaining expectations for the current and next fiscal years.
As stakeholders eagerly await the unveiling of the Interim Budget, the government’s measures to stimulate economic growth, especially for the middle class and rural segments, are poised to be pivotal in shaping India’s financial landscape in the months ahead.
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