2024-07-26
"Sector Spotlight: Winners and Losers of the 2024 Union Budget"
sectors affecting after union budget
The Union Budget 2024 outlines significant
investments across various sectors, promising to drive growth and
modernization. Increased funding for defense, telecom, construction, and
pharmaceuticals aims to enhance national security, boost digital connectivity,
advance infrastructure, and improve healthcare access. However, these measures
also pose challenges, including potential strains on the fiscal budget, reduced
government revenue, and risks of inefficiencies. Balancing these investments
with fiscal sustainability and addressing sector-specific issues will be
crucial to ensure that the budget's ambitious goals translate into meaningful
and equitable progress.
3 Sectors which will affect positively after
union budget 2024:
Defense
sector
The Union Budget 2024 has significantly
increased its allocation for the defense sector, rising from INR 5.25 lakh
crore in 2023 to INR 5.75 lakh crore in 2024—an approximate 9.5% increase. This
boost reflects the government's commitment to enhancing national security and
modernizing the military. The budgetary rise supports the procurement of
advanced defense systems and emphasizes the development of indigenous
production capabilities, which could lead to technological innovations and job
creation within the sector.
The total defense allocation for 2024 stands
at ?6.4 lakh crore, a 10% increase from the previous year, with ?1.5 lakh crore
earmarked for capital expenditure. This funding is directed towards modernizing
the armed forces with cutting-edge technology and weaponry. The benefits of
this allocation include strengthened national security, a stimulated defense
manufacturing industry, and job growth. Increased investment in defense R&D
may also drive technological advancements with potential civilian applications.
However, this substantial increase raises
concerns about the fiscal deficit and may divert resources from other critical
sectors like healthcare and education. Additionally, there are worries that
elevated military spending could exacerbate regional arms races and heighten
geopolitical tensions. Balancing defense needs with other essential
developmental priorities remains a complex challenge for policymakers.
IT
and Telecom Sector
In the Union Budget 2024, the defense sector
saw a significant increase in allocation, rising to ?6.4 lakh crore from ?5.25
lakh crore in 2023—a 10% boost. This includes ?1.5 lakh crore dedicated
specifically to capital expenditure, aimed at enhancing military capabilities
and advancing defense technology. This substantial investment is intended to
strengthen national security and stimulate the defense manufacturing industry.
However, it also raises concerns about potential impacts on the fiscal deficit
and possible reductions in funding for essential social services such as
healthcare and education. Additionally, this increased spending may contribute
to heightened regional tensions.
In contrast, the telecom sector also received
notable funding, with an allocation of ?80,000 crore, reflecting a 15% increase
from the previous year. This investment focuses on expanding 5G infrastructure,
improving digital connectivity, and supporting technological innovation. The
advantages of this allocation include enhanced internet access, which can drive
economic growth, improve services in education and healthcare, and foster
digital entrepreneurship. Nevertheless, the significant expenditure on telecom
could strain the budget and potentially affect funding for other vital sectors.
Moreover, the rapid rollout of 5G technology brings challenges such as data
privacy concerns, cybersecurity risks, and the need to ensure that rural areas
are adequately served. Balancing these investments with other critical needs
remains a key challenge for achieving comprehensive national development.
Jewellery
sector
In the Union Budget 2024, the jewelry sector
received a significant boost with an allocation of ?20,000 crore, up from
?18,000 crore in 2023—a 12% increase. This funding is designed to support
domestic production, provide incentives for gold refining, and promote exports.
The government has also reduced the GST on jewelry from 3% to 2.5%, which is
expected to increase consumer demand and make precious metals more affordable.
The benefits of this allocation include
potential growth in the domestic jewelry market, enhanced competitiveness of
Indian jewelry on the global stage, and support for traditional artisans and
small manufacturers. This increased funding aims to stabilize the industry,
create jobs, and drive innovation.
However, there are potential downsides. The
increased subsidies may strain the budget and potentially divert resources from
other critical sectors. Additionally, while the reduced GST could lower tax
revenues, the sector may face long-term challenges such as fluctuating global
gold prices and the risk of becoming overly reliant on subsidies. Balancing
immediate support with sustainable growth strategies will be essential for
ensuring the sector's long-term stability and innovation.
3 Sectors which will affect negatively after union
budget 2024:
Finance
stock broking Sector
In the Union Budget 2024, the finance and
stock broking sector has seen a significant increase in allocation, rising to
?15,000 crore from ?12,000 crore in 2023—an impressive 25% boost. This funding
aims to enhance financial market infrastructure, streamline regulatory
processes, and support the development of digital trading platforms.
Additionally, the budget has reduced the Securities Transaction Tax (STT) from
0.1% to 0.08%, which is expected to boost trading activity, improve market
liquidity, and attract both domestic and international investors.
The benefits of this increased allocation
include improved market efficiency, better investor protection, and enhanced
accessibility to trading platforms. The investment in infrastructure and
technology can also drive greater transparency and lower trading costs.
However, the reduction in STT could lead to a
decrease in government revenue from financial transactions, and the increased
funding may result in higher regulatory costs for firms, potentially passed on
to investors as higher fees. Additionally, while the focus on technological
advancements is positive, it might not fully address the needs of smaller
investors and traders, potentially widening the gap between large institutional
investors and individual participants. Balancing these investments to ensure
that benefits are equitably distributed across the market will be crucial for
fostering a balanced and inclusive financial environment.
Infrastructure Sector
In the Union Budget 2024, the construction
sector received a notable boost, with funding rising to ?3.2 lakh crore from
?2.5 lakh crore in 2023—an increase of 15%. This additional allocation is
earmarked for major infrastructure projects, including road development, urban
housing, and smart city initiatives. The budget also includes a reduction in
GST on construction materials, such as cement and steel, from 18% to 12%, aimed
at lowering project costs and stimulating sector growth.
The benefits of this increased funding are
substantial. It is expected to accelerate infrastructure development, create
numerous jobs, and enhance urban living through smart city initiatives. The
reduced GST will help lower construction costs, potentially making projects more
economically viable and supporting the development of sustainable cities.
However, there are potential drawbacks. The
large increase in allocation may strain the fiscal budget and potentially
divert funds from other critical sectors like healthcare and education.
Additionally, the rapid pace of construction could lead to environmental
Pharmaceutical Sector
In the Union Budget 2024, the pharmaceutical
sector received a substantial increase in allocation, rising to ?40,000 crore
from ?35,000 crore in 2023—an 18% boost. This funding aims to advance research
and development, enhance domestic manufacturing of essential drugs, and improve
access to affordable healthcare. The budget also reduces GST on essential
medicines from 12% to 8%, making healthcare more affordable and encouraging
sector investment.
The increased allocation is expected to drive
medical innovation, strengthen supply chains, and enhance access to essential
drugs, potentially lowering prices for consumers. This boost could also reduce
reliance on imported pharmaceuticals and support the development of new
medications.
However, potential challenges remain. The
reduction in GST might impact government revenue, and there are concerns about
whether the increased funding will adequately address ongoing issues such as
supply chain disruptions and high production costs. Additionally, there is a
risk that increased funding could lead to inefficiencies or misallocation if
not carefully managed, potentially diverting resources from other critical
healthcare needs. Balancing these investments to ensure meaningful improvements
in public health while maintaining fiscal stability will be crucial.
Conclusion
The Union Budget 2024 presents a bold vision
for growth and development across critical sectors, with substantial
investments aimed at advancing national security, digital infrastructure, and
healthcare. While these initiatives offer promising opportunities for economic
progress and improved public services, they also introduce potential risks,
such as fiscal strain and revenue impacts. Ensuring that the benefits outweigh
the challenges will require careful management and strategic balancing to
achieve sustainable and inclusive development.
- TEAM ELPL