Finance Minister Nirmala Sitharaman holding budget documents on February 1, 2023. | Photo credit: The Hindu
Higher spending, tax cuts and supportive policies announced in India’s 2023-24 budget are expected to support sustained demand growth and improve longer-term business prospects, Fitch Ratings said.
“We believe the tax cuts will boost consumer confidence and maintain consumption growth, amid expectations of slower economic growth after the fiscal year ending March 31, 2023 (FY23)” , the rating agency said after India presented its annual budget for the next one on February 1. financial year.
The announced income tax cuts will benefit the disposable incomes of consumers in all income groups, he said.
The income tax refund limit available to salaried and individual taxpayers under the new income tax scheme, introduced in 2020, has been raised to ₹7 lakh from the current ₹5 lakh.
In addition, the rating agency said that a larger infrastructure budget and the government’s good execution record over the past few years bode well for sectors such as cement, steel and construction.
For the record, the budget document proposed to increase capital expenditure by 33% to ₹10,000,000, focusing on increasing core infrastructure assets including roads, railways, airports and logistics.
“Planned capital spending is more than double FY21 spending and more than triple FY19 spending, underscoring the government’s focus on strengthening the country’s infrastructure,” he said. he noted.
“Growth in demand from the infrastructure end market – which accounts for between 25 and 30% of cement demand – will be positive as we view it as a more stable end market than housing.”
Demand for cement and steel will also benefit from the 66% increase in spending on the government’s soft loan program for affordable housing under Prime Minister Awas Yojana’s (PMAY) scheme. PMAY’s expenditure has been increased by 66% to more than Rs 79,000 crore, Finance Minister Nirmala Sitharaman announced during the presentation of the Union Budget 2023-24 in Parliament.