Union Budget 2022: Investors hope Centre will reduce burden on middle class to boost consumption

Finance Minister Nirmala Sitharaman is set to present this year's budget at the Lok Sabha on 1 February at 11.00 am. It will be paperless and after being presented in Parliament, it will be made available on ‘Union Budget Mobile App’ for the public.

It is expected that this year’s budget will focus on healthcare, agriculture, green energy and manufacturing in India but might not impact the long-term fiscal deficit due to inflation.

Investors are, however, looking out for the fiscal deficit target of the government for this year. As reported by Economic Times, it is expected that India will aim for a fiscal deficit target of 6.3 per cent to 6.5 per cent of gross domestic product for the next financial year.

This fiscal deficit is lower as compared to the estimated 6.8 per cent and this is due to a surge in tax collections and higher nominal GDP. The recent surge in Omicron cases and the spread of COVID-19 infection also pose a threat to economic recovery. A decrease in government expenditure could affect growth prospects and might hurt consumers and businesses.

The investors are driven by the expectations of measures to boost the capital expenditure and continuation of the investment-driven economic policies. They are also hoping that the Budget will reduce the burden of the middle class with tax incentives and other welfare measures to boost consumption, according to a Mint report.

Meanwhile, foreign institutional investors are headed towards Budget day with net shorts of 43,5066 contracts on the Nifty 50 February futures, as per Money Control.

More than 8 billion USD were invested by domestic institutional investors in the December quarter and hence, their investments remain low for January.

Crucial Stocks and Sectors

Rental housing and building material companies might get a tax break and this could boost their construction activity. A increased outlay on capital expenditure can boost companies related to road constructions and capital goods manufacturing.

Incentives for purchase of electric vehicles and a higher allocation for fertilizer subsidy is also expected to be provided in this year's Budget.

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