Decoding Union Budget 24-25 analysis for

budget 2024 presented on 23rd of july 2024 by nirmala sitharaman, finance minister of india

1. 2024-25
DECODING
UNION BUDGET

2. Key highlights of
Economic Survey 23-24

3. India remains world’s fastest growing economy
3
With 7.8% growth in the GDP in Q4FY24, India has emerged as the fastest growing economy in the world
thereby outpacing its peers
6.8
4.6
3.2
2.7
2.2
0.9 0.9 0.8
0.5
0
2
4
6
India China Russia US BrazilSouth
Africa
JapanEuro AreaUK
CY 2024 Growth Projections -IMF(%)
DataSource:IMF(InternationalMonetaryFund).US:UnitedStates,UK:UnitedKingdom.FY:FinancialYear.CY:CalendarYear
India is likely to continue its
Title of ‘Fastest Growing
Economy’this year as per
growth projections by
International Monetary
Fund

4. ImportantCatalysts which are at play!
Macro Stability Domestic Demand
HealthyBalanceSheets
•Government
•Financial System
•Corporates
•Households
Urbanization&
Income Trends
Govt.
Reforms

5. Fortifying Macros –Moderating Inflationary Pressure
5
Indian Economy is faring better than its peers in Growth –Inflation dynamics as coreinflation continues to
decline despite global supply chain disruptions
0
3
6
9
3 5 7 9 11
Average Growth (%)
Average Inflation (%)
Inflation -Growth Matrix
Brazil GermanyIndia Mexico Russia
UK US EMDEs AEs
DataSource:EconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/)UK:UnitedKingdom,US:UnitedStates,AE:UnitedArabEmirates,EMDE:EmergingMarketand
DevelopingEconomy
India
4.1
4.6
5.4 5.5
5.7
5.9 5.9 6
7.3
1
2
3
4
5
6
7
8
United States
Brazil
India
Mexico France Russia
South Africa
Germany
United Kingdom
Current Inflation Levels v/s Targets
2023 Inflation Inflation Target
2.0
3.25
4.0
3.0
2.0 2.02.0
4.0
4.5
India is closest to its Inflation Target

6. Fortifying Macros –External Stability
6
Moderating CurrentAccount Deficit with war-chest of Forex Reserves provides enough buffer to comfortably
meet 11 months of import cover
DataSource:EconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/)ChangeinforexreservesconsideredfromApril24-May24.Bn:Billion.ImportCoverdataisfor
CalendarYear2023
-20 0 20 40 60
Switzerland
Russia
South Korea
Hong Kong
Taiwan
Brazil
Japan
Mexico
China
India
Change in Forex Reserves ($ Bn)
Country Import Cover (In Months)
Brazil 17
China 16
India 11
Korea 8
Indonesia 8
South Africa 6
France 4
US 3
Germany 3
UK 3
Canada 2

7. Healthy Balance Sheets –Govt.
7
Buoyancy in taxrevenue, higher than budgeted non tax revenue (in the form of RBI dividends) and
increasing GST collections has enabled the Govt. to continue its thrust on capex
DataSource:EconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/).FY:Financialyear,PA:PreliminaryActuals
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Corporation Tax Taxes on
income other
than
corporation tax
Customs and
Union Excise
Duties
GST
Govt. Tax Revenues (INR Cr)
FY20 FY23 FY24 (PA)
0
10
20
30
40
FY19 FY20 FY21 FY22 FY23FY24 (PA)
Expenditure Growth (%)
Revenue Expenditure Capital Expenditure
Total Expenditure

8. Healthy Balance Sheets –Govt.
8
Against the global trend of widening fiscal deficit and increasing debt burden, India has remained on the
course of fiscal consolidation
DataSource:EconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/).FY:Financialyear,PA:PreliminaryActuals,R:Revised,PR:PartiallyRevised.E:Estimates.P:
Provisional
15
18
21
24
0
100
200
300
400
500
600
700
2015 2016 2017 2018 2019 2020 2021
2022 R
2023 PR
2024 P
% of GDP
$ Bn
External Debt
External Debt (LHS- $ Bn)External Debt (as a% of GDP)
9.2
6.7
6.4
5.6
4.9
4.5
3
4
5
6
7
8
9
10
FY21 FY22 FY23 FY24
(PA)
FY25 EFY 26 E
Fiscal Deficit (as a % of GDP)

9. Healthy Balance Sheets –Banks & Corporates
9
Impaired loans decelerate further in FY24 and corporate balance sheets are healthy thereby improving the
overall ecosystem for private capex
DataSource:MorganStanleyResearch.DataisshownonFinancialYearbasis.F:FinancialYear,E:Estimates.GNPLs:GrossNonPerformingLoans.
0%
2%
4%
6%
8%
10%
12%
14%
F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F2022 F2023
F2024E
Impaired Loans Decelerate
GNPLs Restructured Loans
48.0%
51.0%
54.0%
57.0%
60.0%
63.0%
F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F2022 F2023
F2024E F2025E
Corporate Debt, % of GDP
62
52

10. Domestic Demand –Magic of 2 P’s
10
Higher scope of penetration in confluence with shift towards premiumisation
may do wonders to domestic demand
DataSource:MorganStanleyandCLSAResearch.DataisshownonFinancialYearbasis.FY:FinancialYear,SUV:SportsUtilityVehicle,PV:Passengervehicle.
Auto
Outbound Trips
Air
Conditioners
Refrigerators
Smartphone
Users
Internet Users
4%
6%
8%
18%
37%
58%
15%
9%
60%
94%
54%
60%
81%
42%
90%
100%
83%
95%
Products India China USA
Expanding wallets of households is set to benefit
the under penetrated demand
15
43
0
10
20
30
40
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23
Share of SUV (%)
Shareof SUVs in PV segment
has more than doubled from
Customer preferences are tilting towards premium
products in line with rising income levels

11. Urbanization & Income Trends
11
Higher scope and rising urbanization trends in the country
bodes well for urban consumption
DataSource:InternationalMonetaryFund(https://www.imf.org/en/Home)andEconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/).MPCE:MonthlyPerCapita
ConsumptionExpenditure.RHS:RightHandSide,USA:UnitedStatesofAmerica
35.4
62.5
82.9
70
72
74
76
78
80
82
84
20
30
40
50
60
70
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Urbanization Trends (%)
India China USA- RHS
88.2
83.9
71.2
0
10
20
30
40
50
60
70
80
90
100
0
1000
2000
3000
4000
5000
6000
7000
2009-10 2011-12 2022-23
% Difference
Average MPCE (INR)
Diminishing Income Inequality
Rural (Rs)Urban (Rs) Urban-Rural Difference (RHS)
Declining inequality in the income spread forms a
stable footing for rural demand

12. Govt. Reforms
12
DataSource:MorganStanleyandEconomicSurvey23-24(https://www.indiabudget.gov.in/economicsurvey/)
The structural reforms undertaken by govt. has put the economy firmly on growth path. Strong execution of
Govt. reforms is likely to further boost the overall macros
Reforms
Year of
Establishment
Make in India 2014
UPI 2016
Insolvency & Bankruptcy Code (IBC) 2016
Real Estate RegulationAuthority 2016
GST 2017
Production Linked Incentive Scheme 2020
PM Gati Shakti 2021
National Logistics Policy 2022
19
75
132
119
144
189
269
0
100
200
300
FY 18FY 19FY 20FY 21FY 22FY 23FY 24
No of resolved cases under IBC
Since last 6 years, IBC has enabled recovery
over Rs3.3 Lakh Crores to the creditors

13. Govt. thurston Capex
13
Consistent growth of Govt. capex has created a conducive environment for the economic cycle to pick-up
post various geo-political shocks
FY 15 FY 23
National Highways
(Km)
97,991
1,44,634
22,224
58,812
FY 15 FY 23
Electrified Rail Route (Km)
581
784
FY 15 FY 23
Cargo Traffic at major ports
(Mn Tonnes)
74
148
FY 15 FY 23
Number of Airports
DataSource:PressInformationBureau(https://pib.gov.in/),DepartmentofEconomicAffairs(https://dea.gov.in/)andMinistryofPorts,ShippingandWaterways-
GovernmentofIndia(https://shipmin.gov.in/).FY:FinancialYear,Mn:Million,Capex:CapitalExpenditure,Km:Kilometers,CPSE:CentralPublicSectorEnterprises,RE:
RevisedEstimates,BE:BudgetedEstimates
5.6
6.9
7.9
10.6
11.111.7
11.4
12.7
14.6
18.6
0
2
4
6
8
10
12
14
16
18
20
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22
FY 23 RE FY 24 BE
Capital Expenditure by Public Sector
(Centre + CPSEs)
Capital Expenditure Grant for capital asset creation
Resources of Public EnterpriseTotal Capex

14. Key BudgetAnnouncements

15. Priorities for Viksit Bharat -2047
15
In line with the roadmap for ‘Viksit Bhart 2047’, Govt. has announced 9 priorities in the Budget
DataSource:https://www.indiabudget.gov.in/
Productivityand
resilience inAgriculture
Manufacturing&Service
Infrastructure
Employment&Skilling
Urban Development
Innovation,Research
& Development
InclusiveHumanResource
DevelopmentandSocial
Justice
EnergySecurity
NextGenerationReforms

16. 16
The Govt. is likely to focus on agriculture research to raise productivity & develop climate resistant varieties
Productivity & Resilience in Agriculture
Provision of Rs 1.52 Lakh Crore made
towards Agricultural & allied sectors
01
Issuance of Jan Samarth based ‘Kisan
Credit Cards’ will be enabled in 5 states
02
10,000 need-based bio-input resource
centres to be established
03
Digital Public Infrastructure to
be implemented in agriculture
for coverage of farmers & their
lands in 3 years
04
National Cooperation Policy for systematic and
overall development of cooperative sector
05
Financing for Shrimp farming, processing and
export will be facilitated through NABARD
06
DataSource:https://www.indiabudget.gov.in/.NABARD:NationalBankForAgricultureAndRuralDevelopment

17. 17
The Budget provided special attention to MSMEs and Manufacturing, particularly labor intensive manufacturing
Manufacturing & Service
Credit Guarantee Scheme for MSMEs in
the Manufacturing Sector providing
guarantee cover upto Rs 100 crore per
applicant
01
12 Industrial parks under the
National Industrial Corridor
Development Programme
02
Credit Availability to the
MSME during the stress
periods (SMA stage) to avoid
getting into the NPA stage
03
Mudra Loans: The limit enhanced to Rs 20
lakh from the current Rs 10 lakh under the
‘Tarun’ category
04
DataSource:https://www.indiabudget.gov.in/.MSME:Micro,SmallandMediumEnterprises,SMA:SpecialMentionAccount,NPA:NonPerformingAsset

18. 18
Govt. to facilitate development of cities as ‘Growth Hubs’ through economic and
transit planning & development of urban areas
Urban Development
PM Awas Yojana
Urban 2.0
Needs of 1 crore urban poor
and middle-class families
will be addressed with an
investment of Rs 10 lakh
crore
Stamp Duty
Stamp duty rates to be
moderated by States. Lower
rates to be charged on
properties purchased by
Women
Water Supply and
Sanitation
Promoting water supply,
sewage treatment &solid
waste management
projects for 100 large cities
through bankable projects
Transit
Oriented
Development
Transit Oriented
Development plans for 14
large cities with a
population above 30 lakh
DataSource:https://www.indiabudget.gov.in/.PMAwasYojanaUrban2.0isoneofthemajorflagshipprogrammetoprovidehousestoeligiblebeneficiariesinurbanareas

19. 19
The budget highlighted energy transition pathway while balancing employment,
economyand environmental sustainability
Energy Security
Under the recently launched PM Surya Ghar –Muft Bijli Yojana, 1 crore
houses to obtain free electricity upto 300 units every month
Fiscal support to be provided to set up 800 MW thermal power plants
using AUSC technology which will have much higher efficiency
For Nuclear energy, forming a part of energy mix , Govt will partner
with private sector to set up Bharat Small Reactors and conduct R&D
for development of new technologies for nuclear energy
Allocation of approx. Rs 19,000 crores to Ministry of New & Renewable
Energy and Rs 20,000 crores to Ministry of Power
DataSource:https://www.indiabudget.gov.in/.PMSuryaGhar:MuftBijliYojanaisagovernmentschemethataimstoprovidefreeelectricitytohouseholdsinIndiaR&D:
Research&Development.AUSC:AdvancedUltraSuperCritical

20. The Big Budget Numbers –Revenue & Expenditure
20
The Govt. to continue the path of Fiscal Consolidation
DataSource:https://www.indiabudget.gov.in/.
Totalreceiptsotherthanborrowings
estimated atRs32.1 Lakh Crore
Total expenditure estimated at Rs 48.21
Lakh Crore
Gross and Net Market borrowings estimated at
Rs 14 lakh and Rs 11.6 lakh crorerespectively
Allocation remains to Defence, Railways, Roads
and Highways continues to remain in line with
interim budget
Capital Outlay stands at Rs 11.11 lakh
crore unchanged from the Interim Budget
From 2026-27 onwards, Fiscal Deficit to betargeted
such that Central Govt. Debt will trend downward
Fiscal deficit for 24-25 estimated at 4.9%
and targeted below 4.5% for the next year

21. Impact on Sectors
21
Highlighting the impact of budget announcement on sectors
Several measures have been announced to
boost tourism which will unlock several
growth opportunities
Allocation of Rs10 Lakh Crore to PM
Awas Yojana Urban 2.0
UrbanHousing Finance
Productivity and resilience in
agriculture was a key focus with an
allocation of Rs1.52 Tn
Staples & Rural Consumption Travel & Tourism
Real Estate
Removal of Indexation benefit on sale of property is a major
headwind. However, lowering stamp duty and reducing
LTCG rate on property may help in better participation
No notable announcements inthese sectors.
However, allocation as highlighted in the
Interim Budget to continue
Defence, Railway, Shipping & Auto
DataSource:https://www.indiabudget.gov.in/.Tn:Trillion,LTCG:LongTermCapitalGain.GreenIndicates:Positive,RedIndicatesNegativeandYellowIndicatesNeutral.

22. Tax Proposals

23. Custom Duty –Precious metals shine
23
Several commodities to becomecheaper following the changes in tax structure of custom duty
Changes in Custom Duty Beneficiaries
3 Cancer medicines to be fully exempt from Custom Duty Affordable medicine
Reduce basic custom duty to 15% on Mobile phones and chargers Mobile Industry
Reduce basic custom duty to 6% on Gold & Silver (6.4 on platinum) Precious Metal
Reduce basic custom duty on shrimp & fish feed to 5%
Exempted more capital goods for manufacturing of
solar cells & panels
Marine Exports
Fully exempt custom duties on 25 critical minerals Boost to strategic sectors
DataSource:https://www.indiabudget.gov.in/.
Support energy transition

24. Direct Tax –New Tax Regime Celebrates!
24
The benefits under New Tax Regime increases providing further relief to citizens
Revised Tax Slab Rates under New Regime
> 15 L
Standard Deduction for salaried employees
increased from Rs 50,000 to Rs 75,000
Deduction on family pension for pensioners
increased from Rs 15,000 to Rs 25,000
To result in Tax savings upto Rs 17,500/-
Nil
0-3L
5%
3-7 L
10%
7–10 L
15%
10-12 L
20%
12-15 L
30%
Income
DataSource:https://www.indiabudget.gov.in/.L:Lakhs

25. Direct Tax –Impact on Capital Markets
25
Several Tax Proposals to reduce the compliance burden, promote entrepreneurial spirit
and provide tax relief to citizen
STCG on listed equities & equity oriented
mutual funds increased to 20%
Corporate tax rate on foreign companies reduced from 40% to 35%
Angel Tax abolished for all class of investors
Major announcements related to Capital Markets
LTCG on certain Financial + Non Financial
Assets to attract 12.5% tax rate
STT increased on Futures & Options (to 0.02%
and 0.1% respectively)
Income received on buyback of shares to be
taxed in the hands of the recipients at
marginal tax rate
Exemption limit for LTCG increased to Rs1.25
Lakhs from 1 Lakhs
For listed securities, period of holding for
LTCG is 12 months and for all other assets,
rationalized to 24 months
TDS on re-purchase of Mutual Fund units to
be removed
Definition of Specified Mutual Fund changed to a mutual fund which invests more than 65%
of its total proceeds in debt & money market instruments or funds which invests in such
‘specified mutual fund’
Indexation on all asset classes would be removed
DataSource:https://www.indiabudget.gov.in/.TDS:Taxdeductedatsource.STT:SecuritiesTransactionTax.STCG:ShortTermCapitalGains.LTCG:LongTermCapital
Gains

26. OurOutlook on Equity & Hybrid
26
•India’slong-termstructuralstoryremainsintactwithmacroindicatorslookingstrongandtheUnionBudget
showcasesGovt’scontinuedcommitmenttoenhancethestabilityoftheeconomy
•TheGovt.continueditsfocustowardsgrowthandalsomanagedtofollowtheglidepathforfiscal
consolidation
•WelcomemovefromGovt.intermsoftaxationamendmentsdonemayfurtherhelpassetallocationschemes
andincreasingtaxeswhereitcanbeabsorbed
•So,overallapositiveBudgetanditmeetsallourrequirementsforsustainingahealthyeconomiccycle
•Equitymarkets,valuationsremainshigh.Thiswarrantsaninvestmentapproachinhybridandmultiasset
allocationschemeswhichcandynamicallymanageexposuretovariousassetclasses.
•ValuationsofLarge-capstocksreasonablecomparedtomidandsmallcaps

27. OurOutlook on Fixed Income
27
•Webelievethatfiscalstimulusshouldbecounter-cyclicaltotheeconomicgrowth.Giventhestronggrowth
witnessed,theUnionBudgetforFY2024-25correctlyadheredtoitsstatedpathoffiscalconsolidation.
•ThefocusofgovernmentcontinuestobeonCapitalExpenditurethanonRevenueExpenditure.
•IncrementalRBIdividendandthePSUdividendwereabsorbedintheBudget,partlythroughanincreasein
expenditureandtheremainderforreducingthefiscaldeficittarget.
•TherewasaminorreductioningrossandnetborrowingsviadatedsecuritiesbytheCentreforthefiscalyear;
lowerthanmarketexpectations.
•WhiletheCentrehasemphasizeditsfocusonbringingdownthedeficit,theStates,ontheotherhand,have
resortedtopopulistmeasures;thismayprobablycauseadivergenceinthefiscalhealthoftheStates.
•Overall,fixedincomemarketswereneutraltotheBudgetannouncements.Wemaintainthateconomicgrowth
willstaybuoyantandinflationgrowthtoremainwithintheRBI’stolerablerange.
•Weprefertheshorter-endofthedurationcurve,accrualassetsanddynamicmanagementofduration.
FY:FinancialYear,PSU:PublicSectorUndertaking

28. Disclaimer
28
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