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The Union Budget 2024 has provided a road map to ‘Viksit Bharat‘. Our finance minister Nirmala Sitharaman has dedicated this union budget to farmers, youth, women and the middle class segment of the society. Â
After the formation of the new government, the theme for the union budget 2024 focuses on generating employment, developing skills among the youth of our country, and supporting the MSMEs (Micro, Small & Medium Enterprises) and the middle class by increasing the standard deduction from ₹50,000 to ₹75,000 with changes in tax slabs under the new regime. However, there were minor setbacks for stock market participants with the increase in LTCG from 10% to 12.5% and STCG from 15% to 20%. However, the capital gain exemption limit also hiked to ₹1.25 lakhs. Additionally, the STT (securities transaction tax) on futures and options trading has doubled from 0.01% to 0.02%.Â
Nevertheless, our country’s economy is on a robust trajectory, with GDP growing at 8.2% in FY 24. Additionally, there has been an improvement in India’s current account deficit and a decreasing fiscal deficit as a percentage of GDP. Additionally, there have been major positive announcements in some sectors of the economy. Therefore, this particular blog will provide you with the top five sectors or industries that could benefit from the government’s union budget. But, before delving into the top sectors, here is a brief overview of the Union Budget 2024.
The image below will allow you to gain an understanding of the income and expenditure of the Indian government.
Overview: Union Budget 2024
The roadmap to ‘Vikasit Bharat’ has been divided into nine priorities by the government that can generate ample opportunities in various sectors and industries of our country. The nine priorities are as follows:
1) Productivity and resilience in Agriculture
2) Employment & Skilling
3) Inclusive Human Resource Development and Social Justice
4) Manufacturing & Services
5) Urban Development
6) Energy Security
7) Infrastructure
8) Innovation, Research & Development and
9) Next Generation Reforms
Here are brief highlights of each of the nine priorities set by the government.
Union Budget Highlights
- Agriculture: India has always been an agricultural based economy. Now, the government is focusing on natural farming i.e, chemical- free and livestock based farming. The union budget 2024 announced that 1 crore farmers across the country will be initiated into natural farming, supported by certification and branding in the next 2 years.
- Employment & Skilling: The PM’s Employment Linked Incentive (ELI) has been launched. The new skill development program 20 lakh youth will be skilled over a 5-year period.
- Human Resource Development: The union budget 2024 allocates ₹3 lakh crore for schemes benefitting women and girls. Also, Pradhan Mantri Janjatiya Unnat Gram Abhiyan aims to improve the socio-economic condition of tribal communities covering 63,000 villages benefitting 5 crore tribal people.
- Manufacturing & Services: The expansion of the PMI index showcases the booming opportunities for growth in both manufacturing and service sectors. To fuel the growth, the union budget 2024 announces a new Credit Guarantee Scheme for MSMEs in the Manufacturing Sector and the limit of Mudra loans has increased from 10 lakh to 20 lakhs.
- Urban Development:The FM announces PM AwasYojana Urban 2.0, in which housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹ 10 lakh crore. Also, the government urges the states to lower the stamp duty charges which is an essential component for urban development schemes.
- Energy Security: Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat, says the FM. A joint venture between NTPC and BHEL will set up a full scale 800 MW commercial plan for development of indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants.
- Infrastructure: The union budget 2024 announced ₹11,11,111 crore of capital expenditure for infrastructure development in the country that would be 3.4 percent of our GDP.
- Innovation, Research & Development: The government is about to set-up a venture capital fund of ₹1000 crore for the space economy. Also, the government encourages private sector-driven research and innovation with a financing pool of ₹1 lakh crore.
- Next Generation Reforms: This union budget 2024 becomes the foundation for formulating the new economic policy framework. For instance, the land records in urban areas will be digitized with GIS mapping. Also, the rules for FDI are about to be simplified starting to promote opportunities for using Indian rupees as a currency for global investments.
All nine priorities are set to kick in the upcoming years of development in the country. Now, you, being an investor in the stock market, what should be your focused sectors or industries to watch out for? Let’s find out.
Top 5 Sectors post Union Budget 2024
1. Infrastructure
In recent years, the Indian government has significantly advanced its infrastructure development, focusing on enhancing connectivity and fostering economic growth. Key projects include the expansion of highways under the Bharatmala Pariyojana, the modernization of railway networks through the Dedicated Freight Corridor (DFC), and the development of smart cities equipped with cutting-edge technology. Additionally, initiatives like the UDAN scheme have improved regional air connectivity. These projects present ample investment opportunities, attracting both domestic and international investors to participate in India’s rapidly growing infrastructure landscape, thereby driving further economic development and integration.
A staggering 3.4% of the country’s GDP which is ₹11,11,111 crore is allocated for the infrastructure development of the country. Also, the government will provide 1.5 lakh crore as interest-free loans to the states to support resource allocation for infrastructure development.
So, which are the top infra stocks to invest in? StockEdge has divided this sector into sub-sectors.
But what are the best stocks to invest in for India’s infrastructure development theme? At StockEdge, we have an Investment theme to bet on the infrastructural changes in India.
Bharatmala is an ambitious infrastructure development initiative launched by the Government of India. The project seeks to improve connectivity, reduce travel time, boost trade and commerce, and stimulate economic growth by enhancing transportation infrastructure. The list of stocks that we have curated for the Bharatmala investment theme are: L&T, Ashok Leyland, Action Construction, PNC Infratech and Dilip Buildcon.
2. Agriculture & Allied
The Indian government has implemented several initiatives to boost the agriculture sector, aiming to enhance productivity, sustainability, and farmers’ income. Schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY) have provided crop insurance to protect farmers against uncertainties. The introduction of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) ensures direct financial support to farmers. Moreover, the FM announced that Kisan Credit Cards will be launched in 5 states.
Investments in irrigation projects under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) have improved water use efficiency. These efforts, coupled with the promotion of organic farming and the adoption of modern technologies, present substantial investment opportunities, attracting stakeholders to contribute to the sector’s growth and innovation.
Indian agriculture, with its vast potential, has been a key focus area for the government, which has allocated ₹1.52 lakh crore for the sector in union budget 2024. This year, the government’s special focus on natural farming, aiming to initiate 1 crore farmers into this sustainable practice, is a testament to its forward-looking approach.
The support for branding and certification further enhances the potential of this initiative. Additionally, the government’s focus on promoting and strengthening the production, storage, and marketing of pulses and oilseeds, and its strategy to achieve ‘atmanirbharta‘ for oil seeds, presents significant growth opportunities for companies like Rallis India Ltd., Nath Bio-Genes (India) Ltd., and Kaveri Seed Company Ltd.
Moreover, the government is also focusing on shrimp production and export. According to global market insights, the shrimp market with a valuation of USD 72.6 billion in 2023 estimated to record a CAGR of over 6.6% during 2024 to 2032. Therefore, now the government will finance Shrimp farming, processing and export will be facilitated through NABARD. So, companies like Avanti Feeds Ltd., Apex Frozen Foods Ltd., IFB Agro Industries Ltd., Coastal Corporation Ltd., Waterbase Ltd. can be benefited.
3. Power & Renewable Energy
India’s power sector is characterized by a diverse mix of sources, including coal, hydroelectric, and renewable energy. As one of the largest and most varied in the world, it has rapidly expanded to keep pace with the country’s growing economy and population. In today’s dynamic global landscape, environmental concerns such as global warming present significant challenges, particularly in reducing dependence on fossil fuels. The objective is to meet the power and energy demands of millions across the nation through renewable energy sources.
Hence the government announced “PM Suryodaya Yojana 2024.” to decrease the dependency on using fossil fuels for generating electricity. This will help about one crore households to obtain up to 300 units of electricity every month free of charge just by installing rooftop solar panels.
Here is an update since the launch of the PM Solar Yojana, which was published by the Government of India.
You can read one of the previous blogs to find out the top solar stocks in India you may invest in.
Along with this, the finance minister also aims to upscale renewable energy in India. The government is ready to partner with private sector companies in order to set up Bharat Small Reactors, research & development of Bharat Small Modular Reactor, and newer technologies for nuclear energy.
Therefore, going forward, you will see more renewable energy usage than fossil fuels. Green Hydrogen is one source of clean energy produced through electrolysis using electricity generated from renewable sources. The application of green hydrogen in India is vast, and it may become one of the clear sources of energy in future. Currently there are a few players in this sector who are targeting to produce green hydrogen at large scale. Read this blog to find out some of the best green hydrogen stocks in India: Sustainable Investments: Best Green Hydrogen Stocks for 2024
4. Tourism & Hospitality
India ranks among the leading countries for foreign tourism expenditure due to its diverse geography and the wide array of cultural experiences it offers. The travel and tourism industries are a major sector in India’s economy, contributing a total of $178 billion to the national GDP.
This union budget 2024 -2025 has emphasized the importance the tourism sector can create jobs, stimulate investments and unlock economic opportunities. The government will support the development of Nalanda as a tourist center and provide assistance to enhance Odisha’s scenic beauty, temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes and pristine beaches make it an ultimate global destination.
This, along with other major projects to develop the country’s tourism, can stimulate the growth in the overall travel, tourism and hospitality sector. To know more about the growing investment opportunities in the tourism sector, you can read: Top 6 Tourism Stocks in India
5. FMCG Sector
Last but not least, India’s fast-moving consumer goods sector may gain back its lost glory in the coming years. The government’s focus on rural areas could be the trigger for strong growth in the FMCG sector. As rural areas develop, infrastructure improves, leading to better connectivity and access to markets. This facilitates the distribution of FMCG products, allowing companies to reach previously inaccessible regions.
Additionally, rising incomes and improved standards of living in rural areas increase consumer purchasing power and demand for a variety of FMCG products. Educational advancements and exposure to media also drive awareness and preference for branded goods, further expanding the market for FMCG companies. Overall, rural development fosters a conducive environment for the growth and expansion of the FMCG sector.
Therefore, it suggests consumption is going to rise heavily through India. The FMCG sector is huge with diverse industries. StockEdge has simplified the classification of the FMCG sector into different sub-industries for you.
However, identification of strong stocks from the FMCG sector can be troublesome for many as there are a huge number of stocks. But StockEdge has developed an investment theme to simplify your investment. Check out the investment theme of Booming Consumption to get the list of some of the best stocks you can invest in.
The Bottom Line
India’s growth story is intact, and it is poised to grow and overcome any hurdle. The Union Budget 2024 has ignited India’s ongoing growth story. Apart from the top 5 strong sectors post the union budget, which include specific sectors and their potential. There are some noteworthy mentions that our finance minister has announced in the union budget 2024. For instance, the focus on upskilling the nation’s youth and providing internships can give rise to businesses like NIIT Ltd. and similar companies in the sector. Next, lowering the customs duty on precious metals like gold, silver, and platinum could benefit companies like Titan Company Ltd., Kalyan Jewellers India Ltd., etc.
Also, the FM mentioned in her speech reforms will be implemented to improve the share of the Indian shipping industry and generate more employment. All these add up to a newer India with the potential to grow at an exponential rate. Therefore, invest in a highly growing sector of the Indian stock market with a greater focus on analyzing the financial performance of the companies in which you’re investing, which will help you to make better investment decisions.
Happy Investing!
