The government is anticipated to continue previous initiatives and implement additional measures, ensuring incremental progress.
Financial analysts and experts are forecasting that the upcoming interim budget will emphasize incentivizing green financing. Further enhancing financial stability, and promoting the integration of technology within the financial sector.
Outlook for the Interim Budget
Although the government is not anticipated to introduce significant changes in this interim budget, as it is a temporary measure, experts expect a continuation of past initiatives alongside incremental measures to propel economic growth and development.
“I expect some initiatives to be announced on how sustainable finance could support organizations from transitioning away from the traditional carbon-intensive sectors to cleaner and greener technologies,” said Vivek Iyer, partner and financial services risk leader, Grant Thornton Bharat.
Iyer mentioned that as part of the green push, the government could consider providing refinance support, particularly concerning climate financing in the 1 February budget.
Iyer also expects the government to announce proposals around India’s digital public infrastructure such as digital payments, and incentivize banks to promote the central bank digital currency (CBDC).
On 1 December 2022, the Reserve Bank of India launched a pilot for retail digital rupee with four banks in four cities, a month after testing the wholesale CBDC.
That apart, he said the government could suggest building more risk buffers by non-bank financiers as part of the financial stability push.
“I expect some directional inputs from the budget which could indicate that RBI will look at mandating higher capital buffers for NBFCs from a financial stability standpoint,” he said.
Bankers’ Expectations for India’s Interim Budget 2024
Bankers foresee the government’s continuity in advancing towards the $5-trillion GDP target. Expecting measures for bolstering domestic manufacturing, rural development, and infrastructure, they predict an upsurge in lending prospects in India. Suresh Khatanhar of IDBI Bank stresses the budget’s potential focus on refining the Insolvency and Bankruptcy Code and optimizing credit flow.
Financial Industry’s Outlook
Non-banking financial companies (NBFCs) foresee potential announcements favoring micro, small, and medium enterprises, fortifying the sector. Emphasizing the need for fiscal stability, MSME empowerment, and simplified GST, Umesh Revankar of Shriram Finance highlights the crucial role of a conducive business environment for NBFCs in funding small businesses.
Indian bankers foresee a budget prioritizing economic growth through measures to enhance domestic manufacturing, rural development, and infrastructure, potentially strengthening lending prospects. NBFCs also anticipate support for micro, small, and medium enterprises, emphasizing the need for fiscal stability and a business-friendly environment.
