Here’s what a dozen analysts expect from Union Budget 2022

The Union Budget 2022 will be pivotal in defining the way forward for the Indian economy amid the ongoing third wave of the Covid pandemic. 

Select market watchers believe that the government’s focus will be on economic revival by increasing spending and need-based capital expenditure would be the key agenda.  Finance Minister Nirmala Sitharaman will present the Union Budget 2022 on February 1.

Here’s what brokerages and money managers expect from the Union Budget 2022.

Vinod Nair, head of research, Geojit Financial Services

We hope that the government will maintain its fiscal expenditure high with a focus on infrastructure. The fiscal position of the government is good, and we hope that it will not be used as agenda for populist measures given the key state elections in 2022. Long-term fiscal deficit decorum is maintained and relaxation will be done in the short-term to increase government spending.

Gaurav Garg, head of research, CapitalVia Global Research

Markets will keep a watch on the disinvestment or asset monetisation strategy and any more specifics that emerge. The Budget will maintain the dual approaches of fiscal discipline and calibrated spending to re-energise growth. Given the five state elections due for March-April 2022, several populist policies aimed at individual states are possible.

Neeraj Chadawar, head-quantitative equity research, Axis Securities

We are not expecting any populist Budget, but we believe policy reforms are likely to continue under the current government. The broad focus of the budget is likely to be on job creation which could mean, more impetus will be on infrastructure. The second focus can be on credit growth, which is still sluggish compared to pre-pandemic years.

Pradeep Gupta, co-founder and vice-chairman, Anand Rathi Group

The focus of this year’s Budget is expected to be growth-oriented. I do not foresee the Budget to hurt any fiscal math of the government. The government would create a balanced Budget to take into consideration the growth and also avenues for revenue generation such as disinvestments. Expectations are that the government will take into consideration the impact of the current ongoing pandemic and focus the budget on the overall growth of the economy.

Vinit Bolinjkar, head of research, Ventura Securities

The government may announce asset monetisation of public sector undertakings under National Monetization Pipeline (NMP). It can also monetise the housing and commercial real estate it owns by floating REITs. We may see announcements related to higher capital allocation towards rail infrastructure and express highways to reduce logistics cost and time, which will improve productivity and economy. 

We also see more emphasis on ‘Defence Procurement Policy’ (introduced in October 2020) to support defence companies and technology transfer. In addition to this, petrol and diesel could come under GST, which will significantly reduce the fuel prices. GST rate on insurance could come down from the current 18 per cent to 5 per cent, to make it affordable for mid to old age people.

Ajit Mishra, VP-research, Religare Broking

We expect the upcoming Budget to focus on growth with higher capital spending on key sectors like infrastructure, railways and agriculture. Moreover, the updates on the government’s disinvestment target for this year and the target for next year would be actively tracked.

Gaurav Dua, head-capital market strategy, Sharekhan by BNP Paribas

From a macro perspective, we expect the fiscal policy to remain supportive of economic growth despite the rising trade deficit and imperative to reduce the fiscal deficit. The focus would be on allocation for capital expenditure and initiatives to fund the ambitious infrastructure development objective of Rs 100 lakh crore investment by 2025. But given the important state elections in 2022, there would be a lot of emphasis on social schemes and initiatives to support the rural economy.

Manish Jain, fund manager, Ambit Asset Management

The government will focus on infrastructure, rural and agricultural in the upcoming Union Budget. We may also see some rationalisation in personal income tax rates and a strong government capex pipeline.  

Sunil Nyati, Managing Director of Swastika Investmart

The market wants a Budget that should be reformist and pro-growth where last year’s Budget headed in the right direction, therefore, we need further momentum to reforms and growth in the upcoming Budget. There were several announcements for the infrastructure sector and that need to be continued, however, there is a need for some significant measures for the real estate and auto sector to create multiplier effects because these two sectors create jobs and growth in multiple sectors. 

Government should increase the tax benefits for housing loans because it is almost at the same level for the last many years. There were many steps taken by the government in the last 1 year to boost the economy but there was no direct focus to boost consumption therefore the market will like to hear some significant announcements for salaried class. 

The market will also like more clarity and pace in the government’s asset monetisation and divestment program. The world is facing many supply-side issues and India can turn some challenges into opportunities therefore the government should focus on some areas in the upcoming Budget.

Joseph Thomas, head of research, Emkay Wealth Management

The coming Budget may focus on the infrastructure, and this along with social development may be the two major pillars on which the budget proposition may be woven around. There may not be any particular incentive that will be offered to investors or for the markets as such. There is a clear need to stimulate consumption and spending to sustain the economic revival. The measures so far in the budgets and outside of the budgets were more on the supply side. The disinvestment plan is likely to become clearer with the Budget, and the glide path to fiscal consolidation is something that awaited very eagerly especially by overseas investors.    

Swati Kulkarni, executive vice president and fund manager-equity, UTI AMC

We expect announcements to bring in uniformity in capital gains tax on gains from insurance company ULIPs and units of equity MF. We think that the expansionary approach that the last year’s Budget took will continue with an objective to support growth by focusing on large employment-generating infrastructure spends. There could be important announcements on high-speed rail, river linking projects, a road map for green energy adoption.  

Amit Gupta, fund manager-PMS, ICICI Securities

The market is expecting a lower fiscal deficit due to growing GST inflows and government push for disinvestment. Otherwise, it will be a more long term outlook budget where outlays for infrastructure spending are already defined. Execution is the key which seems to be improving now.
 

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