There is a possibility of higher outlay on capital expenditure and health care schemes aimed at promoting India’s inclusion in the global supply chain. An ETMarkets poll of a dozen brokerages suggests that more monitoring of transactions could lead to the announcement of steps to reduce tax litigation and promote compliance.
“We look forward to hearing whether the attainment of a tax neutral GST rate would prompt an increase in tax rates and its implications for various sectors. In addition, there is a possibility of reduction in excise duty on petroleum products. The market is also looking for support measures across multiple sectors like housing, auto and auto ancillary, PLI-linked measures,” said Dhananjay Sinha, MD and Chief – Strategist, JM Financial Institutional Securities.
Sinha said that one can hear about the comprehensive strategy of fiscal management as he believes that the economic recovery after the Kovid shock is still fragile and will require continued financial support.
For the working class, Vineet Bolinjkar, head of research at Ventura Securities, is expecting a revision in the work-from-home (WFH) allowance and revisions. standard deduction.
“It is recommended that employees working from home be given an additional deduction of ‘Work from Home’ allowance of Rs 50,000. Also, the standard deduction limit under section 16 of the Income Tax Act has been increased from Rs 50,000 to Rs. There is a possibility of 1 lakh,” he said.
Bolinjkar felt that the tax benefit on home loans for both interest payment and principal repayment could be increased to Rs 50,000 from the current limits of Rs 2 lakh and Rs 1.5 lakh, respectively.
For the MSME sector, Bolinjkar expects further financial support from the government and reforms around import options to promote self-reliance and domestic manufacturing. He said that the inclusion of green energy as part of the policies designed for MSMEs would help in creating a sustainable economy and reduce domestic dependence on energy imports.
Gaurav Garg, Head of Research, Capital Via Global Research, expects PPF limit This was to be increased by Rs 1.5 lakh under 80C, as it was not left out in the previous budget.
“I am expecting some relaxation in taxes and relaxation or cut in GST on raw materials to give a boost to the real estate sector as the sector has seen a sharp jump in the last few quarters. Lastly, I expect the education and healthcare sector to get additional allocation. Third wave of Covid-19,” Garg said.
On February 1, Sitharaman will present her fourth budget.
The other key requirement is higher outlay on capital expenditure. An amount of Rs 5.54 lakh was promised in the last budget, which is 26 per cent higher than the 4.39 lakh crore in FY2011.
ICICIDirect’s head of research Pankaj Pandey expects it to grow 25 per cent to Rs 7 lakh crore for FY23. He said this could substantially enhance the financial capacity of the government to support NIPs along with other financial funding options.
“The government has already started the National Infrastructure Pipeline (NIP), which envisages completion of 7,300 projects worth Rs 111 lakh crore between the period 2020-25. This would require an annual expenditure of over Rs 20 lakh crore every year for these projects. It is equal to the total annual receipts of the government. So, how does the government raise additional funding for ex-channeling investments from PSU units, increasing the funding strength of DFI and NABFID, foreign investment participation and proceeds from the national monetization pipeline, etc. Will be seen in this budget,” Pandey said.
In FY 2012, as of November, the position of government finances vis–vis budgeted amounts is much better than in comparable periods during FY 2010-FY 2011.
Revenue including tax collections (particularly customs and direct taxes) is much ahead of the previous years, while the fiscal deficit behind expenditure is much lower than the budgeted numbers.
“This is likely to allow the government to simultaneously initiate measures to boost growth while initiating the process of fiscal consolidation,” said Sujan Hazra, chief economist and executive director, Anand Rathi Shares and Stock Brokers.
Aditya Sood, Fund Manager, InCred PMS, said the glide path of India’s inclusion in the global bond index is important from the point of view of long-term capital availability.
“Bond investors will focus on clarity on taxation and market access through international central depositories,” Sood said.
As India is attracting a large number of multinationals to set up factories for mobile phones, manufacture EV battery cells and semiconductors, Sood expects the budget to boost compliance by reducing tax litigation and greater monitoring of transactions. Steps to deliver will be announced.
Pandey of ICICIDirect said that measures to make India globally competitive are also possible.
“It will provide a level playing field to the labor intensive sectors and will also boost exports of value added products. For example, creating a new set of policies for SEZs, creation of four Coastal Economic Zones (CEZs), etc.
Vinod Nair, Head of Research, Geojit Financial Services, focuses on the public and private healthcare sector. He also expects to focus on the underprivileged, rural and agricultural sections, especially those affected by the pandemic due to fall in income.
Hazra of Anand Rathi Shares and Stock Brokers said there is a need to address weak rural demand and unsatisfactory performance of farm incomes. “This is especially because the three repealed agricultural laws were seen as the main agenda of agricultural reform. Now with those laws, there should be a new approach to boost agricultural/rural demand,” he said.
From a market perspective, Deepak Jasani, Head of Retail Research, HDFC Securities expects FM to be on the path of fiscal consolidation. The market will focus on monetization of public assets and disinvestment of stake in PSUs and calibrated spending on social welfare and health on the one hand and capex (including infra and railways) on the other.
Religare Broking VP – Research Ajit Mishra said that the budget may have limited but strong actionable announcements such as measures to further boost the real estate and housing sector, measures to boost consumer income as well as consumption. Scheme for disinvestment and asset monetization.
Amar Ambani, Head – Institutional Equities at Yes Securities, sees rising share of government capex in terms of GDP, glide path to lower fiscal deficit, seeing traction in tax revenues, need to incentivize level of savings Up to 80C investment limit is possible. Comparison with growth in nominal GDP value.