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Growth Focussed Union Budget 2023-24

An Impetus to Domestic Manufacturing & Infrastructure Development

The 2023-24 budget announced by the Government of India is focussed on growth, by

increasing consumption through benefits for all and provides an impetus to domestic
manufacturing and infrastructure development.

A Snapshot of Key takeaways from the Union Budget 2023-24

Capital investment outlay increased by 33% to Rs.10 lakh crore

Affordable housing by increasing the outlay for PM Awas Yojana by 66% to over Rs.79,000
crore

Highest ever capital outlay of Rs2.40 lakh crore provided for railways. Increased outlay
for lines construction, track renewals, special projects etc.

Urban infrastructure development fund (UIDF) to be established through use of priority

sector lending shortfall with an allocation of Rs1,000bn annually

10,000 bio-input resource centers to be set-up, creating national-level distributed micro-

fertilizer and pesticide manufacturing network

50-year interest free loan to states for capital expenditure to be spent in FY2023-24,
extended for one more year

Indirect tax proposals aim to promote exports, boost domestic manufacturing, enhance
domestic value addition, encourage green energy and mobility

Outlay for Highways has increased 24.6% to Rs 2.7 lakh cr in FY24.

Fiscal Data at a glance

Revenue FY2024 FY2024 BE v/s Expenditure FY2024
FY2024 BE v/s
FY2023
INR Bn BE INR Bn BE FY2023 RE(YoY)
RE(YoY)
Gross Direct Taxes 18,233 10.50% Capital Expenditure 10,010 37.40%
Gross Indirect Taxes 15,292 10.40% Revenue Expenditure 35,021 1.20%
Total Net Tax Revenue(Centre) 23,306 11.70% Total Expenditure 45,031 7.50%
Non Tax Revenue 3,017 15.20%
Disinvestment revenue 510
Fiscal Deficit 17,868
Source: Union Budget Documents, Prabhudas Lilladher Research, NOMURA Global Market research
Growth Focussed Union Budget 2023-24

Sectoral Impact

 Infrastructure
 Highest ever railway capital outlay at Rs2.40tn, allocation to National Highways Authority
of India has been increase to Rs1622.07bn (+15% from last year). Higher capital outlay in
these schemes should aid in cement and steel demand recovery.
 100 critical transport infrastructure projects, for last and first mile connectivity for ports,
coal, steel, fertilizer, and food grains sectors with investment of Rs750bn, including
Rs150bn from private sources. Open up the sector for increased for increased private
participation.
 Rs33bn allocated for Sustainable Micro Irrigation under Upper Bhadra project. Players to
benefit from higher allocation.

 Manufacturing
 PM Aawas Yojana hiked by 66% to Rs 79,000 cr, along with Rs 75,000 cr for critical infra
projects is a positive for steel companies, metals and probably pipes.
 Basic Custom Duty charges on module of mobile phone, open cells of TV panels is being
reduced from 2.5% to Nil, potential to benefit contract manufacturers.
 PM Awas Yojana Budget enhanced by 66% to Rs790bn – Expected to increase the market
size for building materials companies.
 Allocation for Production Linked Incentive (PLI) Scheme for Automobiles and Auto
Components has been increased from Rs0.11bn to Rs6.04bn

 Banks
 PM Awas Yojana enhanced by 66% to Rs790bn, potential to benefit approved lenders.
 Revamped Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME )to take
effect from 1st April 2023 through infusion of Rs90bn in corpus. This will enable additional
collateral free guaranteed credit of Rs2tn, unchanged from last year.

Our View
The budget was presented against a crucial macro-political backdrop, with an expected slowdown in
global growth, a smaller nominal GDP buffer and ahead of the general elections in 2024. Overall, the
Budget seems positive having pushed for growth via public capex and continued on the path
towards fiscal consolidation.

The broader push towards infrastructure, agriculture, manufacturing and tax rationalization are
consistent with the direction chosen over the last few years. The big push on public capex is a
positive for manufacturing and manufacturing allied companies.

Sticking to the fiscal deficit target in FY23, in an environment of high inflation, global geopolitical
crisis and enhanced outlay on public subsidies, is a positive. The government focus on increasing
consumption through benefits to middle class and impetus to industry to spur investment for
domestic manufacturing and infrastructure development has the potential to help India remain
amongst fastest growing economies globally.

Source: Union Budget Documents, Prabhudas Lilladher Research, NOMURA Global Market Reserach
 Growth Focussed Union Budget 2023-24

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