Union Budget 2023: Expectations of the Industry and the Common Public

The Annual Budget for the year 2023-24 is to be presented by Finance Minister Nirmala Sitharaman on February 1. The common citizens of the country along with the industry will be having a keen eye on this budget, more so this time. This is because it will be the last full budget before the general elections in 2024.

So, what are the expectations of the common Indian from this budget? What does the industry want from this budget? Will the government go for a massive capex push or will it be a budget laden with subsidies and sops? Let’s find out as we try to bring forth the expectations of various sectors from Budget 2023.

Budget 2023 Expectations: Income Tax Slabs

Other than a new optional tax regime in the Budget of 2020, rarely has there been anything to cheer about for the salaried class in India in recent budgets. So, individual taxpayers are looking for some substantial benefits from the upcoming budget. Notably, experts are of the opinion that the Government could consider raising the threshold for the highest tax rate from Rs 10 lakh to Rs 20 lakh. Also, the highest tax rate can be reduced from 30% to 25%, bringing it on a par with companies. Expectedly, this would provide a boost to the purchasing power of the common public and consequently enable the rise in demand for goods and services in the country.

Budget 2023 Expectations: Banking Sector

There has been a substantial capital infusion for banks as they would be the primary funds provider for all the sectors to fund the huge capital expenditure of the Government.

So, the banking sector is not looking for help as such in terms of fund infusion. However, the sector is eagerly looking forward to the stance of the Government in terms of privatization of Public Sector Banks (PSBs). Experts believe that the fast-tracking of the privatization of the PSBs will result in operational efficiencies and also enhance financial inclusion in the country further.

Budget 2023 Expectations: Stock Markets

The equity markets worldwide have witnessed  turbulent times over the last one year. However, even amidst such uncertainties, the Indian equity market has been an outlier as it outperformed its developed and emerging peers. Although experts believe that rich valuations may put a cap on its upside potential in 2023, the Budget can let the Indian stock market’s momentum continue.

How? Market experts believe that the removal of the Long-Term Capital Gains Tax (LTCG) might do the trick. Presently, any gains on stock market investments are taxed at 10% if the holding period is more than one year. However, stock market participants want this tax removed. Notably, experts believe that such a move would provide a significant thrust to the markets and further increase participation.

Nifty 50 and Budget 

In the last five years, Nifty did not have a decent run leading up to the budget. Notably, except for 2018, in all the other years, January has witnessed a negative return for the index.

Post the budget too, the scenario has not changed that much. Except for 2021, the one-month Nifty performance after the budget has been negative.

However, the budget day performance over the past five years has been somewhat positive. Out of the last five budget days, the Nifty has yielded a positive return on three of those days.

Budget 2023 Expectations: Real Estate Sector

The prospects of the real estate market finally look bright after a long while, especially for the residential real estate market. However, rising interest rates and soaring inflation has hurt the buying power of homebuyers somewhat. To negate this, experts in the real estate sector believe that the tax deduction limit on the interest paid on their home loan can be increased from Rs 2 lakh to Rs 5 lakh. Further, experts believe a separate section on principal repayment of housing loans other Section 80 C can be introduced for Rs 4 lakh.

Experts believe that these changes can provide significant impetus to the demand for the real estate market in India.

Budget 2023 Expectations: Automobile Sector

Like the real estate sector, the automobile market is looking upbeat after some years, especially the growing electric vehicle market. Experts remain of the opinion that the government should provide more incentives and assistance to the electric vehicle market in the form of charging infrastructure. Also, more incentives for the end consumers will further entice them to purchase electric vehicles.

Budget 2023 Expectations: Electronics Sector

The consumer durables and electronics sector has seen solid growth in 2021 and 2022 despite various economic headwinds. However, to let this momentum continue, the stakeholders in the sector want more support from the government and the upcoming Budget can provide that.

Rationalization of GST rates remains top priority for the sector, with their key demand being the reduction of GST rates from 18% to 12%.

Further, the sector wants a revamp of the current tariff structure of the country which is hurting its competitiveness in the global market against countries like Vietnam, Thailand, and Mexico. Experts from the industry believe that relaxations in customs duty on the import of supplies will enhance operational efficiencies and further increase India’s competitiveness.

Budget 2023 Expectations: Conclusion

The upcoming budget will be a crucial one for the Government. With elections round the corner, the Government will be walking on a tightrope of growth and fiscal prudence. Thus, a fit budget balancing the two will be essential. Will the Government be able to do it? We will find out on February 1.