As India gears up for the first full-year Union Budget under the NDA government post the 2024 elections, stakeholders across sectors are eagerly awaiting strategic reforms and budgetary allocations. In a recent research note, Fisdom Research delves into the anticipated measures expected to shape FY25, focusing on critical areas such as infrastructure, defense, rural development, healthcare, taxation, and more. These measures aim to catalyze economic growth, enhance social welfare, and bolster various sectors, aligning with India’s vision for comprehensive development and prosperity.
Increased Capex Spending
Expectations are high for sustained high capital expenditure on infrastructure sectors like roads, power, urban development, and railways, said the brokerage. This strategic allocation aims to stimulate economic growth, create employment opportunities, and foster long-term economic multipliers. The BJP manifesto emphasizes robust infrastructure development, aligning with recent interim budget highlights that underscore fiscal prudence with a maintained fiscal deficit target of 5.1 percent. As per Fisdom, key stocks to monitor include Larsen & Toubro (L&T), KNR Constructions, and PNC Infratech, poised to benefit from increased infrastructure investments.
Higher Railway Spending
The brokerage also expects significant investments to be anticipated in expanding and modernizing railway infrastructure, encompassing new lines, station redevelopment, and the introduction of modern trains. This initiative aligns with BJP’s manifesto commitments to enhance railway connectivity and infrastructure. Stocks such as IRCTC, Container Corporation of India, and Titagarh Wagons are likely to gain traction in response to heightened railway sector allocations, it noted.
Affordable Housing and Urban Development
Fisdom also expects funding allocations for affordable housing and satellite township development near metro cities to bolster urban infrastructure and enhance access to affordable housing. The BJP’s pledge to construct 30 million new homes underscores the focus on urban development, complemented by continued investments in affordable housing projects. Real estate stocks such as DLF Ltd., Godrej Properties, and Oberoi Realty are poised to capitalize on these developments, it added.
Modernization of Armed Forces
Fisdom anticipates an increase in defense budgetary allocations to support the armed forces modernization efforts, emphasizing technology acquisition and indigenization. This strategic move aligns with BJP’s commitment to bolster defense capabilities through advanced technology and modern equipment. Defense manufacturers such as Bharat Electronics Ltd. (BEL), Hindustan Aeronautics Ltd. (HAL), and Bharat Dynamics Ltd. (BDL) are expected to benefit from enhanced defense spending.
Farmer Support and Agri-Infrastructure
Expectations include higher Minimum Support Prices (MSPs) for major crops, strengthened agricultural infrastructure, and support for PM Kisan Samman Nidhi. These measures aim to bolster agricultural productivity and rural incomes, reflecting BJP’s manifesto promises and recent budgetary support. Stocks to watch in this sector include Mahindra & Mahindra Ltd., Escorts Ltd., and UPL Ltd.
Support for Startups and MSMEs
As per the brokerage, anticipated expansions in credit programs like Mudra loans and initiatives such as the Startup India Seed Fund Scheme are expected to bolster the startup ecosystem and MSME growth. The BJP’s focus on supporting entrepreneurship aligns with interim budget measures aimed at providing financial support to startups and MSMEs. Financial services and IT sectors, represented by stocks like HDFC Bank Ltd., Kotak Mahindra Bank Ltd., Tata Consultancy Services (TCS), and Infosys Ltd., are likely to benefit from these initiatives.
Job Creation through Public Welfare Schemes
The upcoming Union Budget is poised to emphasize infrastructure projects and public welfare schemes as key avenues for generating employment, particularly in rural areas, it noted. With a focus on job creation highlighted in the BJP manifesto and reinforced in the interim budget, sectors like construction, IT, and services are expected to benefit significantly. Investors eyeing this development should keep an eye on stocks such as Larsen & Toubro (L&T), Tata Consultancy Services (TCS), and Infosys, which are positioned to capitalize on increased government spending in these sectors, stated the brokerage.
Healthcare Initiatives
The brokerage expects continued expansion of the Ayushman Bharat scheme and enhanced focus on healthcare services for women and senior citizens in the upcoming fiscal year. The BJP’s commitment to expanding the Ayushman Bharat scheme aligns with interim budget provisions that aim to increase public health expenditure to 2.5% of GDP. This strategic focus is expected to boost sectors such as healthcare providers and pharmaceuticals, with stocks like Apollo Hospitals Enterprise, Fortis Healthcare, Sun Pharmaceutical Industries, and Cipla poised to benefit from heightened government support and expenditure, it predicted.
Renewable Energy Investments
According to Fisdom, anticipated increases in investments in renewable energy sources, including solar and wind power projects, are set to drive clean energy technologies forward. The BJP’s focus on renewable energy investments, supported by interim budget allocations, underscores the government’s commitment to sustainability. Sectors such as renewable energy are poised to thrive, with stocks like Tata Power Ltd., Adani Green Energy Ltd., and NTPC Ltd. offering potential growth opportunities for investors interested in green initiatives.
Green Initiatives
Support for green hydrogen projects and sustainability-focused infrastructure, including incentives for battery energy storage systems, is expected to feature prominently in the upcoming fiscal agenda. Highlighted in the BJP manifesto and complemented by interim budget incentives, these initiatives aim to promote environmental sustainability and innovation. Investors interested in sustainability projects may consider stocks such as Inox Wind Ltd. and Suzlon Energy Ltd., which are positioned to benefit from increased government support and market demand for green technologies, forecasted the brokerage.
Personal Income Tax
Expectations for revisions in income tax slabs to provide relief to the middle class are high, with potential increases in basic exemption limits and adjustments to tax thresholds anticipated, it said. The BJP manifesto’s emphasis on enhancing disposable income for the middle class aligns with the interim budget and hints at tax structure rationalization to support economic activities. Sectors benefiting from increased consumer spending, including consumer goods and retail, may see potential growth opportunities for stocks such as Hindustan Unilever, Nestle India, Marico, Avenue Supermart, and Titan Company, noted Fisdom.
Corporate Tax
Anticipations include potential reductions in corporate tax rates for MSMEs to bolster growth and sustainability. Emphasized in the BJP manifesto, these measures aim to support MSMEs and startups as pivotal drivers of economic growth and employment. Investors monitoring this sector may consider stocks such as HDFC Bank, Kotak Bank, and Axis Bank, which are well-positioned to capitalize on a competitive tax environment aimed at attracting investments and boosting industrial growth, it predicted.
As India prepares for the FY25 Union Budget, expectations are set on transformative measures across key sectors to drive economic resilience and social welfare. The anticipated reforms underscore the government’s commitment to infrastructure development, defense modernization, rural upliftment, healthcare enhancement, and progressive taxation policies. These initiatives are pivotal in navigating India towards sustained economic growth, fostering sectoral resilience, and unlocking opportunities for both investors and stakeholders across diverse industries.
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