Just as India was showing signs of recovery and people were rejoicing at the thought of the ‘end of Covid-19 era’, the Omicron wave dampened the overall enthusiastic sentiment. The hopes of declining inflation and robust demand are again hanging loosely on a thread. The biggest question is how will the Union Budget fight off the upcoming threat?
What To Expect?
The market has huge expectations from the Union Budget 2022 – from sops for the housing and healthcare space to higher Capex in infrastructure and relaxation in capital gains tax. But the twin hurdle of inflation and lower purchasing power is really a big cause of worry. Media experts believe that there will be investments in infrastructure as the real estate prices currently are in the best shape. Many are forecasting the government's focus on investment and manufacturing to boost supply.
In the last budget, the Centre's emphasis was mostly on healthcare space and banking. Monthly EMIs were delayed, free vaccinations were given, housing affordability was taken into consideration and much more. This time a similar trend will continue given the Omicron wave is spreading rapidly. The main sectors to be in focus would be real estate, banking, healthcare and manufacturing. The Centre could also make personal income tax easier in terms of heads and filing.
Biggest Blockers?
A recent media survey said that there are 4 main roadblocks for the Budget this time, which is persistent inflation, falling purchasing power, the Omicron wave and the government's failure to walk its reform talk.. The survey pointed out that people will be closely watching if government reforms are being implemented. State elections are around the corner and the Centre's reforms could be the deciding factor for the elections.
What Lies Ahead?
India's goal to achieve a net zero target by 2070 will be the hot topic in policy decisions. Most of the decisions taken by the Centre will be around this debatable topic. So far, India Inc. and the union government seem confident of better days ahead, amidst renewed concerns of a newer, highly transmissible Omicron. Another area to remain in focus is LIC IPO. It is expected that the Centre could push the IPO plans to the next financial year.
