As the Union Budget 2023 approaches, investors and market analysts are paying close attention to the announcements that could affect the Indian stock market.
- Introduction
- Expected highlights of the budget 2023 by experts
- Probable changes to the tax system in Budget 2023
- Sectors to watch in the Budget 2023
- Infrastructure, Energy, Manufacturing, and Defense
- Agriculture
- Healthcare, Education, and Transportation
- Banks, Finance, Housing, and IT
- EV and Renewable Energy
- Tourism and Hospitality
- FAQ
- Conclusion
Introduction
Indian Finance Minister Nirmala Sitharaman will unveil the Union Budget 2023 on February 1st. It’s important for Indian stock market participants. Some have concerns that it may be a populist budget. The government may focus on the needs of the common people because this budget is the last of the current government.
“The government will likely present a budget that appeals to the majority of people in the low- to middle-class category.” They will try to maintain positive sentiment in the stock market by focusing on new policies.
On particular sectors and stocks, the Union Budget has a substantial impact. Specific industries and businesses may perform differently as a result of government pronouncements made in the budget. For instance, businesses in the building and engineering sectors profit from increased infrastructure spending. Manufacturing companies benefit from tax breaks, which is good for their business.
The Union Budget announcements affect different industries and companies. So obviously, this impacts their performance.
Expected highlights of the budget 2023 by experts
Experts have varying predictions for the Union Budget 2023. Some expect a populist budget due to the upcoming elections, and others hope for a budget that prioritizes long-term growth and fiscal consolidation.
They expect the budget to focus on sectors such as infrastructure, energy, and defense, with a potential emphasis on attracting manufacturing CAPEX and reducing the current account deficit.
Experts anticipate potential market growth and job creation in the 2023 budget. The focus will be on key sectors such as PSUs, PSBs, and railway companies. Some experts predict a pattern of buying before an announcement and selling afterward in certain sectors.
Experts also warn of potential volatility in the broader market during the budget session. Overall, the experts anticipate that the budget announcements will have a significant impact on market sentiment.
Probable changes to the tax system in Budget 2023
The budget will have a significant impact on the tax system. So taxpayers, investors, and businesses will closely watch the announcements. Changes to the tax system will have to be seen in the context of the overall economic situation and the government’s fiscal position. Tax benefits for investors and taxpayers are expected.
Some experts are of the opinion that the government may announce new policies in the upcoming budget to broaden the tax base and improve compliance. These measures could include increasing penalties for non-compliance. It means those who don’t follow the tax laws will face harsher punishments.
The government may increase the tax exemption limit for individuals in the budget. It may also provide relief to the middle class by raising the standard deduction or increasing the limit for tax-free investments.
This can lead to more disposable income for individuals, boosting consumption and economic growth. Tax incentives for investors and individuals are anticipated to boost spending and investment.
The government may reduce the corporate tax rate in the budget or provide tax holidays or exemptions for certain industries to attract investment and boost growth. This can lead to increased profitability for companies, boosting investment and job creation.
The government may consider reducing the GST rates on certain goods and services in the budget. They may also simplify the GST compliance process to boost consumption and reduce the compliance burden on businesses.
Sectors to watch in the Budget 2023
The 2023 budget may offer tax breaks and increased spending for rural areas, welfare programs, and healthcare. The government plans to promote growth in the manufacturing sector through policies such as PLI.
Infrastructure, Energy, Manufacturing, and Defense
The government’s main priorities in the 2023 budget will be to lower energy costs, improve energy security, and decrease dependence on imports by promoting solar power, public transport, and electric vehicle-related subsidies.
Experts anticipate that the budget will focus on growth by improving infrastructure, manufacturing, and exports and providing tax benefits for investors and taxpayers. The energy and power sector, including companies that provide distribution, generation, and transmission services, are also likely to benefit from the budget.
There is a chance that the government will invest heavily in building and upgrading infrastructure such as roads, bridges, airports, and ports. This is the budget, which will create opportunities for companies involved in construction, engineering, and infrastructure development.
The government has been taking steps to decrease reliance on imports and promote the domestic defense manufacturing industry in recent years. India has seen a significant increase in defense exports, growing from 1.521 billion in 2016-17 to 12.815 billion in 2021-22. Additionally, the government has also reduced the percentage of capital expenditure on defense imports by the armed forces, from 41.89% in 2019-20 to 36% in 2020-21.
The government will likely increase spending on defense equipment and modernize the armed forces in the budget. This will create opportunities for companies involved in defense manufacturing and services.
Agriculture
The government will focus on increasing farmers’ income and promoting rural development in the budget. Companies providing agricultural equipment and services and the food processing industry will likely benefit. Experts believe that the budget for 2023 will announce measures to boost organic farming.
Farmers are expecting the government to provide support in the form of incentives and schemes to improve their income sustainably. One way to do this is by setting up demonstrations of new crops and technologies in concentrated clusters at the village or gram panchayat level to make it easier for farmers to produce and sell their products. Additionally, the government should also encourage the use of modern and innovative crop nutrition solutions to decrease farmers’ dependence on traditional fertilizers.
The government must set up veterinary clinics and animal health camps in remote areas to support the rural livestock sector. Subsidies for animal feed and breeding must be provided. Programs for disease control and monitoring must be implemented. The government must invest in research and development of new technologies. This will improve livestock productivity, such as genetic improvement and precision farming.
Farmers must be trained and educated on modern techniques of animal husbandry, handling and marketing to improve their income and livelihood. These initiatives will improve the overall health and productivity of the rural livestock sector, boosting rural communities.
Healthcare, Education, and Transportation
Experts predict that the government will invest in healthcare and welfare programs in the budget. So, this will create opportunities for companies in healthcare, medical devices, and pharmaceuticals.
The government will focus on education and skill development in the upcoming budget. This is because investing in education and training will help produce the skilled workforce that the country needs.
The government plans to focus on modernizing and upgrading transportation infrastructure in the upcoming budget. It includes railway companies and state-owned enterprises that provide transportation services. Investors and market participants will closely watch the announcements. The government may provide incentives to set up the required infrastructure in the sector.
The budget for healthcare and welfare may include:
- Additional funding for public healthcare systems to provide better access to healthcare for all citizens.
- Investment in research and development for new medical technologies and treatments to improve health outcomes.
- Programs to increase the availability and affordability of essential medicines and medical equipment.
- Support for the growth and expansion of telemedicine and other digital health solutions to improve access to healthcare in remote and under-served areas.
- Financial aid and subsidies for low-income individuals and families to access healthcare services.
- Investment in training and education of healthcare professionals to enhance the quality of care and address workforce shortages.
- Initiatives to improve the welfare of the elderly, disabled, and other vulnerable groups, including providing financial and other support for their care and well-being.
- Investment in public health and preventative measures, such as vaccination programs, to improve the overall health of the population.
- Increased allocation for mental health, which is crucial for the overall well-being of the population.
- Financial support for the improvement of sanitation, drinking water, and health-related infrastructure in rural areas.
Banks, Finance, Housing, and IT
“The budget will have a significant impact on the banking sector, in which PSBs, banks owned and controlled by the government, play a crucial role.” Investors and market participants will closely watch the announcements.
The government will focus on strengthening the financial system in the budget. Banks, insurance companies, and other financial service providers are likely to benefit.
The government may focus on promoting digital infrastructure and technology-based solutions in the budget. Companies providing digital services such as e-commerce, software development, and IT services will likely benefit.
The government will focus on affordable housing in the budget. It will create opportunities for companies involved in the construction and development of affordable housing.
EV and Renewable Energy
One of the top priorities of the budget will be supporting electric vehicles in order to diminish dependency on fossil fuels and cut pollution. So, the budget may offer incentives to EV manufacturers to install charging infrastructure and promote R&D in this field.
As a result, there might be a rise in interest in electric cars, which is good news for businesses that produce EVs and provide services related to them, including infrastructure for EV charging.
The government is expected to announce measures for the energy sector in the upcoming budget. Because this will help reduce energy costs, improve energy security, and decrease dependence on imports.
Some of these measures could include promoting the use of solar power and investing in better public transportation. The budget is likely to offer incentives for people to buy electric vehicles as well.
They may also give incentives to companies in the renewable energy sector and invest in renewable energy infrastructure, research, and development. This could boost demand for the renewable energy sector. So companies involved in renewable energy products and services will enjoy the benefit.
Tourism and Hospitality
The government may also announce incentives for the tourism and hospitality industries. This could include setting up tourism infrastructure and promoting R&D in this field.
This could increase demand for tourism and hospitality services. This will lead to benefits for companies involved in tourism, hospitality, and related services.
FAQ
Who will present the Union Budget 2023?
Indian Finance Minister Nirmala Sitharaman will present the Union Budget 2023-24.
When is Union Budget released?
Every year on February 1, Union Budget is released.
What are the three types of budgets?
Surplus Budget, Balanced Budget, and Deficit Budget are the three types of annual government budgets based on estimates.
What is the Halwa ceremony in Budget?
The Halwa ceremony is an annual custom in which the customary dessert is prepared and presented to officials and employees of the finance ministry who assisted in the creation of the Budget.
What is the theme of Union Budget 2023?
Boosting employment, building infrastructure, and revitalizing rural lives is the probable theme of the Union Budget 2023.
Conclusion
“The Union Budget for 2023 will have a significant impact on Indian stock market sentiment.” It’s uncertain which sectors will benefit the most.
Some experts are hoping for a budget that is forward-looking and not focused on winning popular support, with an emphasis on spending for long-term growth and being financially responsible. This will be well received by market participants and foreign investors.
The Union Budget 2023 has plans that could benefit different sectors of the Indian economy. From a stock market point of view, this budget has the potential to increase investor confidence and growth in areas like agriculture, infrastructure, defense, energy, healthcare, auto and tourism.
The focus on job creation, rural development and infrastructure can benefit sectors like construction, real estate, fmcg, and banking. Overall, the budget has the potential to drive growth and create opportunities for various sectors of the Indian economy. So, investors are eagerly waiting for a broad-based pre and post-budget rally led by Indian benchmark indices NIFTY 50 and BSE SENSEX.
Investors and market participants should closely watch the announcements and assess their impact on the economy before making any investment decisions.
