What The Budget 2024 Mean for Indian Investors?
The Interim Union Budget for 2024-25, presented by Finance Minister Nirmala Sitharaman, emphasizes keeping prior commitments and supporting lower economic classes. Despite being a pre-election budget, it prioritizes infrastructure, healthcare, education, and agriculture. As an Indian investor, it's vital to grasp the budget's impact on various sectors and assess potential effects on investment options.
Indian investors are eagerly awaiting the upcoming budget and hoping for positive changes that will grant them greater financial freedom and improved livelihood. They are keen to see if the budget meets their expectations and are exploring the right Mutual Fund options that promise profitability and returns for post-budget investment.
Highlights that reflect the Budget Purpose
Taxation
- No changes in tax rates for direct taxes in FY 2024-25.
- Individuals earning up to Rs.7 lakh won't pay income tax under the new regime.
- Corporate taxes stay at 22%, but new manufacturing companies get a reduced rate of 15%.
- Direct tax collections tripled in the last decade, and return filers increased by 2.4 times.
- Tax return processing time reduced from 93 days in 2013-14 to 10 days in 2023-24.
- Extension of certain tax benefits for start-ups and investments by sovereign wealth funds/pension funds.
- Tax exemption for specific IFSC units extended until March 31, 2025.
Railways Enhancement
40,000 normal train bogies upgraded to safer Vande Bharat.
Three new railway corridors are planned for smoother and more efficient train travel.
Electricity Reforms
The rooftop solarisation scheme was introduced for 10 million households.
Initiatives outlined to achieve 'net zero' by 2070, including funding for offshore wind energy and mandatory blending of compressed biogas.
Green Energy
Funding support for offshore wind energy.
Plans for coal gasification and liquefaction capacity expansion.
Mandatory blending of compressed biogas with compressed natural gas and piped natural gas.
'Lakhpati Didi' Initiative
The success of the scheme in rural areas, empowering nine crore women.
Target raised from 2 crore to 3 crore women.
Investment Promotion and Technology Advancements
Focus on FDI and bilateral investment treaties.
₹1 lakh crore for a fifty-year interest-free loan for research and innovation in emerging technologies.
Healthcare
Vaccination drive against cervical cancer for girls aged 9-14.
Upgradation of Anganwadi centers under Saksham Anganwadi and Poshan 2.0.
Introduction of U-WIN platform for enhanced immunization.
Housing
Pradhan Mantri Awas Yojana (Grameen) is close to achieving the 3 crore houses target.
New scheme for middle-class housing to promote home buying or construction.
MSME Empowerment and Agriculture Support
Emphasis on training for MSMEs and upskilling.
Efforts to boost farmers' income and encourage private and public investment in post-harvest activities.
Government's Focus on Inclusive Growth
Commitment to the progress of women, youth, poor, and farmers through various schemes and initiatives.
- 25 crore people lifted out of poverty in ten years.
- ₹34 lakh crore through PM Jan Dhan Yojana.
- Support for artisans under PM Vishwakarma Yojana.
- Skill India Mission trained over 1.4 crore youth.
- Fiscal deficit target for FY25 set at 5.1% of GDP.
- Gross and net borrowings for 2024-25 are lower than 2023-24.
- Inflation within the target band (2%-6%), and economic growth increased.
Let's explore the concept of investing strategy together
Investing Strategy According to Budget?
As per the new budget 2024, what was the investment strategy for investment in mutual funds, the investment strategy will depend on your investment goals.
For Aggressive Investors
If you are willing to take higher risks to potentially earn higher returns, you may want to consider investing in funds that focus on sectors that are likely to benefit from the budget. Large and mid-cap funds can offer a diverse investment portfolio, infrastructure funds can provide potential growth opportunities in construction and development, IT funds can offer technology-driven investment opportunities, and pharma funds can provide potential gains in the pharmaceutical sector. During market dips, it is advisable to consider buying more of these funds to take advantage of lower prices.
Benefits of Large and Mid-Cap Funds
Diversification
Offers a mix of Large & Mid-cap stocks for portfolio diversification.
Balanced Risk-Return Profile
Combines stability from Large-Cap stocks and growth potential from mid-cap stocks.
Growth Opportunities
Access to the growth potential of Mid-Cap stocks alongside the stability of large-cap investments.
Adaptability to Market Conditions
Can navigate various market scenarios, with mid-caps for potential outperformance and large-caps for stability.
Professional Management
Expert fund managers handle the selection and management of stocks.
Liquidity
Greater liquidity compared to small-cap stocks, providing flexibility in trading.
Lower Volatility
The inclusion of large caps helps mitigate overall portfolio volatility.
Potential for Dividends
Large-cap stocks often pay dividends, offering investors periodic income.
For Conservative Investors
If you are looking for a more cautious investment approach that prioritizes stability over high returns, a balanced portfolio may be a good choice for you. You can consider investing in Hybrid funds, which combine stocks and bonds to offer a mix of growth and stability. Alternatively, bond funds can provide a reliable income stream with lower risk than stocks. This approach can help you manage investment risks while still allowing for some growth. It's all about finding a balance between potential returns and protecting your investment, which makes it a great option for those who prioritize stability over high-risk investments.
Key terms of Hybrid Funds
Diversification
Blends stocks and bonds for a diverse investment mix.
Balanced Risk and Return
Combines growth potential with stability.
Adaptability
Adjusts allocation based on market conditions.
Stable Income
Provides regular interest income from bonds.
Professional Management
Expertly managed by fund managers.
Risk Mitigation
Balances potential losses with income from Debt Funds.
Moderate Risk Tolerance
Ideal for investors seeking a middle-ground risk level.
Reduced Volatility
Offers stability through a mix of asset classes.
Liquidity
Generally more liquid than pure Equity funds.
Goal Alignment
Suited for medium to long-term goals, combining capital appreciation and income generation.
Profitable Schemes for Indian Investors?
Finance Minister Suggests Expanding Ayushman Bharat Coverage to Include ASHA, Anganwadi Workers, and Helpers.
Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), the government health insurance program, now covers all helpers, Anganwadi workers, and Accredited Social Health Activists (ASHA).
Sub-centers and health and wellness facilities offer this health insurance, which is overseen by the Ministry of Health and Family Welfare. It provides free hospitalization for medical care to Indian homes that are struggling financially.
There is no fee for this family health plan, and it pays for medical costs up to INR 5 lakh. Since its launch in September 2018, Ayushman Bharat has aided approximately 55 crore individuals from 12 crore families, according to the finance minister.
Loans Worth INR 43 Crore Given Through PM Mudra Yojana.
The finance minister gave some encouraging news on small company support. The government has awarded loans of INR 43 crore through the PM Mudra Yojana, reaching an amazing INR 22.5 lakh crore for individuals who wish to launch their own businesses. Notably, women businesses have received INR 30 crore of these loans.
The government's special initiative, the PM Mudra Yojana, provides funding to small enterprises that are not multinational corporations. This facilitates the obtaining of loans up to INR 10 lakh for small enterprises, retailers, and vendors to support their expansion and cash requirements.
Conclusion
In conclusion, the Union Budget for 2024-25 reflects a pre-election focus on maintaining prior commitments and uplifting the lower economic classes. The emphasis on infrastructure, healthcare, education, and agriculture outlines the government's priorities. As an Indian investor, understanding the implications of the budget on various sectors is crucial for informed decision-making.
The taxation highlights, railways enhancement, electricity reforms, and the 'Lakhpati Didi' initiative signal opportunities and areas of focus for potential investment. Aggressive investors may consider large and mid-cap funds, infrastructure funds, IT funds, and pharma funds, while conservative investors might opt for balanced portfolios like hybrid funds and bond funds to balance stability and growth.
Additionally, the expansion of Ayushman Bharat and support through PM Mudra Yojana demonstrate the government's commitment to healthcare and small businesses. For those considering Systematic Investment Plan (SIP), aligning them with the budget's priorities and potential sectors of growth can be a prudent strategy. The overall aim is to navigate the investment landscape with an understanding of the budget's impact, aligning individual financial goals with strategic investment choices.
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