GR Exclusive: Pre-Budget Expectations 2024, Mutual Fund: What Industry Feels?

As India is keenly looking forward to Budget 2024, the mutual fund industry anticipated increased possibilities for growth after delivering robust performance last year. Nifty and Sensex soared to a new nigh in 2023, mutual funds too produced outstanding returns with major schemes offering more than 20% returns.

The strong surge in Asset Under Management (AUM) in the last few years provides hope for the mutual fund industry. Here what experts from the Mutual Fund Industry feel about the upcoming Budget 2024:

Mr Mihir Vora, CIO, TRUST Mutual Fund said, "Continue fiscal consolidation, Deficit target of 5.3-5.5% against FY24 at 5.9%. FY24 saw muted revenue expenditure growth of about 3% while capital expenditure remained the focus, with 30% growth so far. Revenue expenditure growth for FY25 may continue to remain low. FY25 may focus on support to rural consumption as it has been a weak spot, Focus on rural may be at some cost to capital expenditure."

Direct tax collection growth may be lower compared to FY 24 which will see over 20% growth. Indirect tax collections to remain healthy. FY 24 will see Tax/ GDP at the highest levels since 2008. This will continue to improve with increasing compliance. PLI schemes to continue and more sectors are likely to be covered under the scheme, said Mihir Vora.

Defense spending growth may be single-digit, but focus on private sector manufacturing and local manufacturing to continue. Railways capex growth to continue. Divestment targets may be higher for FY25 as stock markets are near all-time high, and there is appetite for public stocks. For the first time, personal income tax collections are higher than corporate tax collections. We may see some lowering in personal income tax rates and slabs under the new regime, added Mihir Vora.

When it comes to budget expectation this year, Satish Ramanathan, CIO - Equity, JM Financial Asset Management Ltd said, "Given the current mood, we do not anticipate any populism in the budget. We do not expect that the Government will go for major announcements in an "interim budget", before the elections.

They may signal their intent on continuing on the path of pragmatic fiscal management with a continued focus on infra spending and spending on social infrastructure. One area where we may expect some positive relief is on personal income tax. There may be some rationalisation of tax slabs and rates. A budget which broadly reflects the past trends while laying down the big picture for the way ahead, may be welcomed by the market and be supportive of the economy, added Satish Ramanathan.

Murthy Nagarajan, Head-Fixed Income, Tata Asset Management said, the Union Budget of 2024-25 is targeting a fiscal deficit of 5.3 % and capital expenditure outlay of Rs 12 Lakh crores. Market expectation of borrowing programme is similar to last year of Rs 15.50 Lakh Crores. This budget is expected to focus on Investment and increasing the supply side of the economy."

Given the initial forecast of normal monsoon, CPI inflation for next year should be below RBI projection of 4.5%. This should lead RBI changing its stance to accommodating from withdrawal of liquidity and rate cuts of at least 50 basis points. This should support GDP growth at the margin, as consumption growth has weakened due to higher inflation. Lower interest rates are expected to keep the bond market buoyant next year, added Murthy Nagarajan.

Meanwhil Deepak Gagrani, Founder of MADHUBAN FINVEST said, "Given that it is an interim budget, we anticipate a tempered approach with fewer large-scale announcements. Major policy shifts may be reserved for the full-fledged budget."
We foresee the government's persistence in steering taxpayers towards the new tax regime, possibly through the introduction of additional slabs and incentives. We don't hold high hopes for substantial improvements in personal taxation under the old regime, added Deepak Gagrani.

We expect a sustained emphasis on domestic tourism and renewable energy. Both sectors are likely to feature prominently, showcasing the government's commitment to sustainable practices and boosting the domestic economy, stated Deepak Gagrani.
Infrastructure Development: We expect continued attention on infrastructure development, with potential allocations for projects aimed at enhancing connectivity, transportation, and overall economic growth," Deepak Gagrani stated.

Disclaimer: The views, opinions highlighted above are by industry experts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.