Understanding India's Union Budget 202X: Focus on Fiscal Deficit, Taxation, and Corporate Taxation

In the upcoming Union Budget, three key points will significantly impact your pocket and the stock market: fiscal deficit, taxation, and production-linked schemes.

  • Here are 22 clean bullet points summarizing the video:
  • The Union Budget is India's annual financial statement that outlines estimated revenue and planned expenses for the upcoming fiscal year.
  • The budget speech typically runs for 1-2 hours, making it difficult for a layman to focus on key points.
  • The top three points to focus on are:
  • + Production Linked (PL) schemes
  • Fiscal deficit is the difference between government expenses and income. A lower deficit is better for the stock market.
  • The estimated fiscal deficit for FY 25 is 4.9% of GDP, which is expected to remain at or below this level.
  • If the revised estimate is above 4.9%, it will negatively impact the stock market.
  • The target for FY 26 is 4.5%, and if this figure is revised upwards, it will also negatively impact the stock market.
  • Over the past four years (FY 21-24), fiscal deficit has been rapidly decreasing.
  • Check if the government's fiscal deficit trend continues to decline or remains stable.
  • + Basic exemption limit increase: You pay less tax and have more disposable income.
  • + Standard deduction increase: You pay less tax and have more disposable income.
  • + Change in rebate or tax slabs: This will impact your pocket directly.
  • No change is expected in the current basic exemption limit, standard deduction, or tax slabs.
  • If capital gain tax rates increase, it will negatively impact the stock market.
  • Corporate taxation currently stands at 25% and 30%, based on turnover criteria.
  • A corporate tax reduction would positively impact the stock market, while an increase would negatively impact it.
  • Production Linked (PL) schemes:
  • + Introduced to increase domestic manufacturing
  • + Reduce dependence on imports
  • PL schemes can lead to a runup in stocks from that sector, making them attractive for investment.
  • Check which sectors receive the PL scheme and find fundamentally strong stocks within those sectors.

Source: CA Rachana Phadke Ranade via YouTube

❓ What do you think? What does the Union Budget reveal about India's financial priorities, and how might these priorities impact individual investors and the broader economy? Feel free to share your thoughts in the comments!