Budget is one of the biggest days for any economy. This day is not only considered important for big business houses, but it also affects every household of the economy. Starting from what we eat, to what we wear, how we live, and what we drive, every bit of our consumption life is touched.
The budget is present every year on the first of February, it is an elaborated statement of income and expenditure of the government in the previous fiscal year an estimated expenditure and revenue for the coming fiscal year. Our honorable finance minister of the country reads the entire statement and lets the public know about the budget of the country, on Marco’s level.
Similarly, as we are just a month away to start FY23, Finance Minister Nirmala Sitharaman will present her fourth Budget to Loksabha at 11:00 AM on the 1st of February.
Before knowing the market expectation of the budget, have a look at the current status of the economy.
The international monetary fund has estimated the GDP of India for the current fiscal year to be at 9%, however, it’s was lower than the earlier projection of 9.5%, amid the impact of omicron and its effect on the businesses.
Further to top the concern on the economy is lackluster consumption economy. Many consumer-facing companies have also shown concern over a slowdown in the rural ecpn0omy, a major driver of consumer demand growth.
Keeping the growth rate and slower consumption rate in the economy, various sectors have their expectation from the budget, which may put some money into the pocket of the consumer which may further push the economy.
Hospitality Sector:
Covid has taken the hospitality sector down over the last two years. This sector needs some care look from the government and thus this sector is eyeing the budget for lower taxes and incentives in terms of offering interest-free loans, subsidies, and reduction in tax rates.
Aviation Sector:
Despite covid, the Aviation sector has shown great growth potential. The sectors have shown some strong growth indicators like growth in passenger load factor, traffic, capacity expansion, incremental cargo business, strong aircraft purchase, etc.
Given the essence of the aviation sector for Indian economic development, the sector is expecting some tax relief like reduction in import duty (and VAT) on ATF, incentives for setting up flight training academies, and other organizations contributing to aviation-specific skilling.
The sector also exects some fiscal support like government guarantee for commercial, tax deferral, and holidays in payment for airport landing and parking charges.
Real Estate Sector
Real Sector developers are expecting some streamlining in taxation in real estate and developing an investment climate in the sector. Further, the industry also expects its long due industry status and one window clearance.
Another expectation is extending the tax relief to the homebuyers by raising the tax deduction limit from 2 lakh per annum to 5 lakh per annum for home loans.
Education Sector
Education has always been a priority sector for the Indian economy.
With Covid hitting everyone hard, it has paved the way for online education. The sector expects some support to promote technology in the sector. Technology is expensive and the government should give some relief in the form of tax rebates on the technology.
The sector also seeks some expenditure on research and development and promoting technological advancement in the sector in Tier2 and Tier 3 cities.
Healthcare Sector
Covid had a huge impact on the entire Life Sciences and Health Care (LSHC) industry.
Industry asks for zero-rating of healthcare services. As the healthcare services are GST free, then GST paid on inputs and inputs services become a cost for the industry. Thus zero-rating will make the industry enable to claim refunds for GST paid on inputs. The industry also seeks a reduction in GST on input and input services and GST credit on expired goods.
Financial Sector
The banking sector is undergoing a major structural change. Expectation from the budget is high from this industry and they anticipate reforming the country’s public banking sector.
Foreign bank branches are expecting a cut in corporate tax which stands at 40%, whereas domestic banks ays in approx 22%, as tax.
Banks are also expecting a rise in an income tax deduction for bad and doubtful debts provision.
Insurance Sector
The insurance industry is budding in the country, with people understanding the importance of investment and insurance of various kinds available to make life easier demand for insurance is increasing. The insurance sector seeks GST n health insurance to be slashed to 5% from the existing 18% and Micro-insurance and sachet products to be exempted from GST.
Household
Salary people expect a no-tax for income up to Rs5lac, which will increase their net income. Household also expects an increase in the limit to Rs3 lac from Rs1.5 lac under section 80C and other similar deductions. Further people also want an increase in the limit to Rs 50,000 from Rs25,000 under section 80D.
These
are some expectations from our finance minister in its budget to be
presented on 1st February. However, time will tell how much will the
government meet the expectations of various sectors and the common
man.
Stocks to pick before budget day
- Exide Industries: keeping in mind the climate and emergence of an electrical vehicle, Government may have some good surprises for the electric vehicle industry.
- Tata Power, Reliance Power: Power is one of the key ingredients of a developing country. Any package for the power sector will push the power stock in an upwards direction.
- ICICI Bank, SBI bank: Two banking biggies must be in the investor’s kitty before the budget day, as any positive reform in the banking sector will provide support to the banking stocks.
Investors must keep under the radar the various sectors talked about. But investors may study well before picking any stock on the budget day, as higher volatility is expected during the budget.