Budget 2023-24: Relief to middle class set to spur private consumption

The government plans to collect just over Rs 9 trillion via personal income tax in FY24

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Photo: Shutterstock
Krishna KantSharleen Dsouza
2 min read Last Updated : Feb 01 2023 | 10:22 PM IST
The Budget has given a fillip to private consumption by providing income tax relief to the salaried and middle class. This is expected to spur demand for consumer goods such as personal-care products, food items, two-wheelers and passenger cars.

“The intent is there to provide support to private consumption by putting more disposable income in the hands of people. This is positive for leading stocks in fast-moving consumer goods (FMCG), consumer durables and auto sectors,” said Dhananjay Sinha, head of research and strategy at Systematix Institutional Equity. However, he added that the overall income tax relief at Rs 35,000 crore may be too small to move the needle for companies.

The government plans to collect just over Rs 9 trillion via personal income tax in FY24.

In the Budget, the finance minister also announced relief for the consumer durables sector. The Customs duty rate for camera lens and components used in mobile phones has been slashed to zero.

The Budget will continue the concessional duty on lithium-ion cells for batteries for another year. 

Similarly, Customs duty on open cells of TV panels has been cut to 2.5 per cent from 5 per cent. The move is expected to lower the production cost of mobile phones and TV sets domestically.

The stock market, however, remains doubtful about the overall impact of the Budget on the growth trajectory of consumer stocks.

Nine out of 15 leading consumer stocks ended in red on Wednesday. These include Hindustan Unilever (-0.3 per cent), Bajaj Auto (-0.3 per cent), Maruti Suzuki (-1.5 per cent), Mahindra & Mahindra (-1.9 per cent) and Titan (-1.3 per cent).

ITC was the top gainer (up 2.6 per cent) followed by Havells India (up 1.3 per cent), Britannia (up 1.2 per cent) and Asian Paints (up 0.6 per cent).

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Topics :Income taxCustoms dutyBudget 2023income

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