Summary: With the Union Budget 2022 on the horizon, many pandemic-hit sectors are looking for a revival package – and expectations are high! Read on to know where investors could potentially set their sights.
Along the rest of the world, the GDP of India was impacted by the onset of the COVID-19 pandemic and in spite of the challenges that followed, the GDP later experienced vigorous growth in 2021. GDP growth is predicted to be 9% in 2022 as per IMF estimates. The economy is expected to further recover and grow stronger as stability returns. However, the impact of the black swan event has not spared several sectors with the service industries facing the major burnt of it.
The travel and tourism industry, for instance, estimates a Rs. 200-500 crore loss in the last two years. Even MSMEs, aviation, and education sectors have not been spared. The pandemic has also caused structural challenges and job shifts in the employment sector.
In this scenario, the government is sure to focus on reviving sectors that require support and boost in consumption patterns. Some likely expectations for the Budget 2022 include:
- Plans to make the MSME sector a central part of the Atmanirbhar Bharat initiative, and easing credit accessibility and fundraising
- Expediting infrastructure projects already underway, raising capital and increasing investment via asset monetisation
- Raising the farm credit target from Rs. 16.5 trillion to Rs. 18.5 trillion, and providing farmers with loans at subsidised interest
- Shining the spotlight on the National Education Policy with an emphasis on upgrading the digital infrastructure and funding the Ed-tech sector
- Increasing the budgetary allocation for public healthcare to at least 2.5% of GDP
With so many positive economic changes on the horizon, here are some sectors identified by Marwadi Financial Services that smart investors should keep an eye on.
Aviation, Hospitality, and Tourism
The government may propose tax exemptions for different sections of the aviation industry. The reduction in taxes on Aviation Turbine Fuel (ATF) is expected here as well as lowering of airport fees and charges.
It will also likely take the ‘One India One Tourism’ approach which is inclusive of the ‘One Tax Structure’ for the hospitality and tourism industry. It may also change IT deduction policies and temporary tax breaks for the entire sector.
Stocks to have on your watchlist: IndiGo, SpiceJet, Indian Hotels, Lemon Tree Hotels, Easy Trip Planners
Increased budgetary allocation towards the healthcare sector is expected. Incentives to improve medical infrastructure in tier-2 as well as tier-3 cities are likely to be announced.
Stocks to have on your watchlist: Apollo Hospital, Narayana Hrudayalaya, Metropolis Labs, Dr. Lal Path Labs, Krishna Institute of Medical Sciences
The road and transport sector can expect a 30% hike in the Union Budget 2022 allocation. The government may lay down norms to ease capital and fundraising for infrastructure investments.
Stocks to have on your watchlist: Dilip Buildcon, IRB, Ashoka Buildcon, GR Infraprojects
Electrical vehicles (EV)
The government is likely to be keen on accelerating EV adoption by building easily accessible charging stations, tax exemption to manufacturers, and citizen reward programs for EV buyers.
Stocks to have on your watchlist: Tata Motors, Mahindra & Mahindra, Maruti, Bajaj Auto, TVS Motors, Hero MotoCorp, Tatapower
The Indian economy is set to experience exponential growth. And every prudent investor can be a part of this story with strategic steps towards achieving financial goals. The CBDT’s net direct tax collection for FY 2021-22 increased to more than 60% yoy which can be expected to be passed on to taxpayers in the form of a lower income tax rate. The market saw a correction this month due to FED’s strong stance on rate hikes in 2022 but we believe that the long term India growth story remains intact and any correction is a good Investment opportunity for the long term.