Budget 2022 may put in place strong measures to protect & strengthen India’s financial ecosystem

The time is rolling, and the country is awaiting the Union Budget 2022-23. Finance Minister Nirmala Sitharaman is going to present her fourth Budget on February 1st this year.

Last year was dedicated to recovery and creating several pathways to bounce back after the havoc created by Covid 19. And along the way, inflation fluctuated substantially and remained stuck on the higher side.

As the new Covid variant becomes the new threat to the Indian economy, the government is expected to put in place strong measures to protect and strengthen its financial ecosystem. The government will seek sufficient liquidity to support capital expenditure, infrastructure spending and restore confidence in the banking system. And fuel the investment cycle, improve domestic consumption and create employment opportunities.

And so the government will push its agenda to cement higher growth indirect taxes and garner disinvestment receipts. Well, let’s have a quick glance at the expectations of some of the prominent sectors:

The real estate industry is asking for its age-old industry status, single window clearance, ease of project finance, lower long-term capital gains tax to encourage more investment, schemes for rental housing, etc.

Revitalising the housing market is going to be an important issue. Buyers are looking for some sort of sovereign guarantee against future financial uncertainties because of the uncertain job market and job insecurity amidst Covid.

And so loan deferment and restructuring can be addressed in the coming budget. The hospitality sector and theatres have seen their worst hit and are expecting great help in recovery and bouncing back. They are seeking incentives, interest-free loans, subsidies and reduction in tax rates. Prominent welfare schemes for rural development department like MGNREGS, Pradhan Mantri Gram Sadak Yojana (PMGSY) and the Pradhan Mantri Awaas Yojana (PMAY) will probably be allocated higher funds than 2021-2022.

Pharma will continue to be on track because of the jump in healthcare expenditure and rising domestic and export demand. Stock market insiders are seeking the removal of LTCG Tax (Long Term Capital Gain Tax) or reducing the STT tax. Though for years various delegates and market representatives have been turned down in the past with this request. However, as the stock market is penetrating in India, the government may reduce the dual tax with policy measures making the Indian market more investment-friendly in comparison to other emerging markets. In fact, the Indian stock market has enjoyed the highest year-on-year increase in absolute terms historically in 2021– adding a whooping Rs 72 lakh crore to investors’ wealth.

The BSE Sensex gained 10,054 points between January 1, 2021, to December 29, 2021, and made history by breaching the 50,000-mark for the first time ever. And on October 18 it reached its lifetime high of 61,765.59. What’s been the secret? Primarily it has been because of domestic retail investors — for instance, in 2021 the total number of new Demat accounts opened were 27.4 million. It is reported that Domestic investors have put in over ₹82,340 crores until December 22, 2021. Plus a record number of initial public offerings (IPOs) – over 550, for a total amount of over $70 billion of capital invested. Plus, a surge in foreign investment as a lot of investors shifted their investment from China to India.

The industries that have done fairly well in 2021 were – Technology, Basic Material, Financial Services, Energy and Industrial. Some of the biggest stock markets winners include Reliance Industries ( 17.56%), Infosys (49.87%), Tata Consultancy Services (29.46%), ICICI Bank (36.60%). Henceforward will see potential growth in Defence companies, QSR sector, Pharma sector, in fact India will be number two country in the world in pharmaceutical industry ‘Make in India’ initiative is going to continue to get an incentive to boost domestically manufactured goods and reduce import dependency.

Recently the government has declared January 16 as the National Startup Day as start-ups are now playing a key role in India’s financial ecosystem.

● All in all, India has an array of solid promising companies backed with strong financials, good governance and growing future potential.

And like last year, Covid will not be able to curb this growth; this upward thrust is going to stay and seems promising.

As per our economic analysis We observed that….. the Indian Government is changing whole economic Architecture of our Country to make it the 3rd richest strongest economy in the World in the next decade……

(By Videsh K Totaare, MD & CEO, Archers Wealth Management Pvt Ltd)