“We expect government spending on infrastructure to grow at a slower pace at high single to low double digit compared to an over 30% CAGR witnessed over trailing four years. In contrast, we believe the government would incentivise private capital spend (especially towards manufacturing and housing industries), which has remained modest over the past years due to global uncertainties and lower consumer spending,” analysts said. Despite the impending election, analysts do not see any boost for welfare schemes and other populist gestures this time. “With the recent triumph in state elections, the upcoming Interim Budget for 2024 appears [poised] to steer clear of grand populist gestures. Instead, the focus would be on maintaining the status quo with a keen eye on policy continuity,” said analysts at ShareKhan. However, this does not mean that the government will completely ignore the stress that has been building up in the rural economy for the last two years. Sales of consumer goods, particularly two-wheelers and lower-end cars as well as discretionary items, have been under pressure in the rural markets.ShareKhan, therefore, expects “enticing incentives” for reviving the rural economy and anticipates moves designed with the rural heartland in mind. “The government has already provided some relief by extending the Pradhan Mantri Garib Kalyan Anna Yojna (PMGKAY) for an additional five years until December 2028. It might also increase the allocation under various rural schemes including MNREGA (was Rs. 60,000 crore in Union Budget 2023) and various skill development schemes such as Pradhan Mantri Kaushal Vikas Yojna 2.0 (budgetary outlay was Rs. 12,000 crore),” analysts said. Contrary to what the Finance Minister has said about the budget being only about expenditure, some of the analysts have predicted an interim relief in tax cuts as an attempt towards improving consumption. Meanwhile, Jefferies has a different take on the vote-on-account, and said it would be significant and would set the broad direction for the main budget that will follow towards the middle of the year. It pointed out that the February 2019 interim budget set the agenda for the ‘real’ budget that followed in July.Unlike most others, Jefferies expects a relatively tepid growth in capex at around 7-8% and more focus on welfare schemes. However, the broker believes the slower capex growth by the government will be offset by the private and housing sectors. At the same time the broker expects a boost in welfare spending, an increase of 7-8% excluding subsidies. “By increasing social expenditure but decreasing capex growth, the government will try to contain the fiscal deficit at 4.5 percent of the GDP by FY26,” the broker said.ALSO WATCH:
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