Budget's Broad Strokes
The recent budget has been crafted with the intention of boosting infrastructure and supporting micro, small, and medium enterprises (MSMEs). Simultaneously,
the government is aiming to meet the fiscal deficit target by FY27, as projected by S&P. This budget is perceived as a catalyst for economic expansion by focusing on investment and setting the stage for growth. Moreover, it includes provisions for tourism and mobility, signaling the government's commitment to diverse economic sectors. Tax devolution is a significant aspect, with substantial allocations to states like Meghalaya and Assam: Meghalaya is slated to receive Rs 9,631 crore in FY27, while Assam is expected to get Rs 50,000 crore within the same timeframe.
Sectoral Performance Review
The manufacturing and export sectors are poised to receive a boost due to the budget. This is in addition to the emphasis on infrastructure and MSMEs. The steel industry anticipates increased demand because of the budget's focus on these areas. Certain companies have also reported their quarterly results. For example, Thermax experienced a doubling of profit, reaching Rs 209 crore in the December quarter. Similarly, Awfis saw a rise in its Q3 profit, reaching Rs 21.65 crore, a 43% increase. In contrast, Akzo Nobel India’s profit declined by 31.6% in the same quarter, while UPL Ltd’s profit decreased by 43% to Rs 490 crore.
Market & Financial Dynamics
The stock market initially saw a drop following the budget announcement, but has since rebounded. The rupee's value has demonstrated some fluctuations. It saw an increase against the US dollar after the budget's release. Simultaneously, foreign portfolio investors (FPIs) withdrew around Rs 36,000 crore in January. The Reserve Bank of India (RBI) reported that 98.42% of Rs 2000 banknotes have been returned. The finance ministry commented on the currency's movement. In the commodities sector, gold prices have recovered, whereas silver prices have decreased.
Trade and Policy Updates
The India-US trade deal is anticipated to benefit both nations, with the USISPF welcoming the agreement. Moreover, the deal is expected to provide a boost to engineering exports. In other news, the government is considering restructuring the PFC and REC merger. The recent budget has also introduced temporary relaxations for SEZs. The Revenue Secretary clarified these changes. The government is also prioritizing employment generation. The Minister responded to related queries, emphasizing the government's focus on this area.
Industry Specific Highlights
Several sectors are demonstrating varied performances. Royal Enfield saw a 14% increase in sales in January. Suzuki India’s sales increased by 15% during the same month. HMSI sales saw a year-on-year increase of 29%. Furthermore, the government is focusing on inclusive credit for the unbanked, according to the DFS Secretary. The Ministry of Finance has also commented on the rupee’s movement. Regarding the aviation industry, IndiGo paid Rs 22 crore in passenger compensation. Air India is dealing with the reported fuel switch defect in its Dreamliner aircraft.
Other Notable Developments
The government is considering the sale of its stake in LIC FPO in FY25. Marri Retail is planning a fresh issue worth Rs 522 crore. JS Auto Cast has secured Rs 300 crore from Premji Invest. Moreover, the Delhi High Court stated that RIL’s USD 3.8 billion recovery appeal is maintainable. The government is committed to workforce development, as reflected in the budget, and is focusing on job-ready talent. In Odisha, Vedanta has been allotted land for the Dhenkanal project. Furthermore, the budget includes provisions for the empowerment and accessibility of Divyangjans.
