Macquarie expects capital infusion for some public-sector banks, loan limit reduction for non-banking financial services to enforce Securisation and Reconstruction of Final Assets and Enforcement of Security Interest Act in the upcoming union budget announcement for financial year 2025-26.
In the consumer space, it expects mid-to-high single digit increase in cigarette taxes, while the brokerage suggests keeping an eye out for any outlay increase in the Mahatma Gandhi Rural National Employment Guarantee scheme. In the defence sector, it anticipates potential announcement of initiative to enhance exports.
Here are Macquarie's sector-wise expectations from the budget announcement.
Banks, NBFCs & Insurance
Any announcement, especially, regarding enhancement of interest breaks on housing loans and affordable housing allocation will be key factor for banks, non-banking financial services, and insurance companies, Macquarie said.
The brokerage doesn't expect any capital infusion for some public-sector banks and insurance companies. It also doesn't see any favourable treatment for deposits.
In the NBFC space, Macquarie expects reduction in loan limit for enforcing SARESI act from Rs 20 lakh to Rs 10 lakh. The brokerage sees credit guarantee similar to SMEs for micro finance institutions sector.
Any tax rate changes on any product for insurance industry are unlikely, according to the brokerage. No change in corporate profit tax rates as well, it said.
Infrastructure
Macquarie suggests to monitor capital expenditure allocation for key ministries like railways and roads, given the context of slowdown in central government's capex spends year-to-date.
Any announcements about large value projects such as additional dedicated freight corridors will be taken positively, the brokerage said.
Consumer
The brokerage sees mid-to-high single digit increase in cigarette taxes. Higher outlay for MGNREGA and crop centric schemes, reduction in taxes for low-middle class consumers will also be important to look out for the consumer space.
Defence
Initiative to boost defence exports and fastening domestic defence equipment procurement would be key to watch in the budget, Macquarie says.
Auto
Traders may keep an eye for outlay for PM Electric Drive Revolution and Auto Production-Linked Incentive scheme, as it will drive localisation of key electric vehicle components. Moreover, announcement on tax cuts/allocation for rural oriented schemes like MNREGA etc. is another key variable.
Pharmaceuticals & Healthcare
Budget for financial year 2025-26, may come up with potential support for higher research and development through tax deduction, production-linked schemes for anti diabetic and weight-loss medication, Macquarie said.
There's likely moderate increase in budget allocation for Ayushman Bharat and updated/more allocation to open more apex healthcare institutes such as AIIMS, the brokerage said.
Oil & Gas
For oil marketing companies, the key point of consideration would be compensation for LPG under recoveries. The government has not given any such compensation in the previous budget. If it gives any such compensation, it will benefit OMCs, especially Indian Oil Corp. being the largest beneficiary.
The Confederation of Indian Industry recommends lowering excise duty on petrol/diesel. Macquarie doesn't expect any significant announcement with regards to natural gas, apart from broader long-term targets on energy mix.
Lastly, Macquarie doesn't expect any duty cut or reversal of customs on gold from the government in the budget announcement. It expects the government to take various steps to increase number of initiatives to enhance green energy penetration in the country.
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