Instant view: India's finance minister unveils budget, promises reforms to drive growth

(Reuters) - India will reduce its budget gap sharply in 2024-25 and focus on infrastructure and long-term reforms to drive growth, Finance Minister Nirmala Sitharaman said on Thursday as the government presented its last budget before a national election due by May.

The government said it would reduce its fiscal deficit to 5.1% of GDP in 2024-25 from 5.8% this year.

COMMENTARY

ANUJ PURI, CHAIRMAN, ANAROCK GROUP, MUMBAI

"The interim budget 2024 made no big-bang announcements, but it continued to focus on infrastructure upgrades and building connectivity across the country. This will benefit real estate growth in not just the top cities but also in Tier 2 and 3 cities across the country."

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

"The government's resolve to stick to the fiscal consolidation path is a welcome step and the lower-than-expected market borrowings for 2024-25 is likely to be positive for the bond market."

SANJAY CHHABRIA, DIRECTOR, INDIRECT TAX, NEXDIGM, MUMBAI

"The full fiscal picture will drop in July 2024. For now, they're keeping it balanced and far-sighted. The interim budget does not have any indirect tax reforms as expected by the industry. This delays the industry's expectations to the next budget."

SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI

"This budgetary approach, combined with the inclusion of Indian bonds in the global bond fund index, indicates substantial scope for a reduction in bond yields. This is not only favourable for the bond market, but also augurs well for the Indian equity market."

"The budget is particularly beneficial for public sector banks due to their large bond holdings, as well as for infrastructure, tourism and logistics companies, in light of the specific announcements made. The focus on housing is particularly positive for cement and other building materials."

DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS AND RESEARCH, GURUGRAM

"Two broad themes of this budget are fiscal consolidation and stepping up focus on agriculture/rural to course-correct to some extent the differential benefit of the ongoing economic growth which is tilted in favour of households of upper-income bracket/urban areas."

AMIT ANWANI, RESEARCH ANALYST, PRABHUDAS LILLADHER, MUMBAI

"It feels like the government is keeping headroom for a fuller budget if it comes to power post-elections."

SACHCHIDANAND SHUKLA, GROUP CHIEF ECONOMIST, LARSEN & TOUBRO, MUMBAI

"The interim budget effectively juggled the need to support growth while signalling continued fiscal consolidation. This will be reassuring for investors and rating agencies alike."

VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI

"The budget for FY25 signals policy continuity by sticking to fiscal rectitude, thrust on maximising bang for the buck via prioritisation of hard capex, housing and digital penetration."

"Lowering the fiscal deficit target in FY25 strengthens the government's commitment for preserving macro-financial stability, while being prudent enough to ensure that the gradual tapering of fiscal accommodation in the post-pandemic phase does not result in any economic withdrawal symptoms."

RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE

"The budget delivered on the consolidation and capex theme, by not only expecting the FY24 deficit to fare better than budgeted but also pegging the FY25 goalpost at a narrower-than-expected (level of) 5.1% of GDP. By extension, gross and net borrowings are much lower than FY24 providing significant relief to the domestic debt markets."

"Despite the welfare focus on women, youth, poor as well as the farming community, the government avoided outright populist measures."

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI

"The budget is well grounded covering all important sectors, while balancing the electoral compulsions. It is high on optics, low on spending impact as fiscal consolidation remains paramount focus."

"The focus on the power sector, including new energy, railways, defence and affordable housing is encouraging, although 11% capital spending growth is much lower than 30% seen on average in last three years."

"The budget lacks consumption triggers. Thus, is a departure from the previous pre-election vote on accounts."

"The market will have to re-align to the new reality of lower growth in capex hereon as FY26 fiscal deficit target is the priority."

MANOJ PUROHIT, PARTNER & LEADER - TAX & REGULATORY SERVICES, BDO INDIA, MUMBAI

"The government has continued its support to farmers under the crop insurance facility and intends to further strengthen the same. This will ensure penetration and awareness around insurance in rural India thereby providing a boost to the insurance industry."

RAJESH NARAIN GUPTA, MANAGING PARTNER OF SNG & PARTNERS, ADVOCATES & SOLICITORS, MUMBAI

"Huge incentives to the private sector for innovations by creating a new fund exceeding one lakh crore and further a deep focus on infrastructure development by increasing the overall provisions as well as steps being taken towards rural, women and farmers development are astounding steps which will accelerate India becoming a developed nation."

MANMEET KAUR, PARTNER, KARANJAWALA & CO, DELHI

"The government's plan to assist states in developing 'aspirational districts' and focus on eastern India's development is a welcome move."

"Solar energy's expansion is going to get a boost with the announcement of rooftop project which will provide for free electricity of 300 units per month and from solar surplus."

"More support to electric vehicles will generate more jobs for vendors/youth in the sector of electric installation and maintenance."

(Reporting by Nikunj Ohri, Dhanya Skariachan, Sarita Chaganti Singh, Hritam Mukherjee, Rama Venkat, Kashish Tandon, Yagnoseni Das, Ashish Chandra; Editing by Eileen Soreng and Sohini Goswami)