Finance Minister Nirmala Sitharaman will present her fourth Union Budget on February 1 this year. The economy activity is likely to be adversely affected this year due to the new variant of coronavirus entering India. The stock markets have become volatile ahead of the annual event, and that will be reflected in the stock markets. Any move to cut costs related to stock transactions can neutralise the effect of a correction in the market that is close to its all-time high.
Here is a look at what market experts said about the upcoming Union Budget.
Sunil Nyati, Managing Director of Swastika Investmart said that the market wants a budget that is reformist and pro-growth where last year's budget went in the right direction. We need more momentum in the upcoming budget for reforms and growth.
The market will like to see more clarity and pace in the government's asset monetisation and divestment programme. India can turn challenges into opportunities and the world is facing many supply-side issues, which is why the government should focus on some areas in the upcoming budget.
I think STT should be removed or at least reduced in terms of taxation related to the stock market, because initially it was introduced in place of the long-term capital gain tax. We have both LTCG and STT, which is not fair for Indian investors. In India, stock market penetration is increasing and it is anticipated that the government will take policy measures to make the Indian market more investment friendly than other emerging markets where reducing LTCG and STT could be a good step in that direction. The transaction cost in India is too high and LTCG and STT are seen as a sentiment dampener for the market. Jyoti Roy, DVP Equity Strategist at Angel One said, We expect that the Union Budget will focus on targeted spending while maintaining fiscal discipline. We expect the fiscal deficit for FY 23 to be well below the budget estimate of 6.8% for FY 2022 due to better than expected tax collections. The government is expected to continue its focus on providing support to the rural economy and manufacturing sector through increased spending and PLI schemes. We expect that the government will raise allocation to the infrastructure and housing sector because of their high multiplier effect on the economy. We do not expect a major announcement in the Union Budget, and we believe that the government will continue with its reform process even outside of the Budget. As the COVIDnd and 3rd wave is wreaking havoc on the Indian economy, investors and consumers are expecting a strong Budget 2022, according to AR Ramachandran, Trainer, Tips 2 Trades. Retail investors would like to have STT reduced or even abolished, and have 0% tax for long-term investments. The hospitality sector, from an industry perspective, is expecting a number of relaxations in terms of easy access to loans or reduction in taxes in the coming year, given the flexibility of the industries like education, hotels, travel tourism, and auto auto ancillary.