The Modi government promised to double farmer incomes when it was voted to power in 2014 and although various measures have been introduced, analysts said agricultural growth has been uneven. The budget needs to set a roadmap for enhanced productivity and better remuneration, they said.
Price hikes may have improved the topline of FMCG companies, but also led to consumer downtrading, specially in personal and home care categories
Markets want the government to spend more on targeted high-multiplier sectors, boost rural demand and consumption but also keep fiscal deficit at a manageable level and avoid tinkering with taxes.
Automakers are not expecting any relief for ICE vehicles but want the government to spur demand while EV makers are seeking standardization of battery voltages, an extension of Fame II and correction of inverted duty structure
Though the sector has recovered from the impact of COVID-19, the high goods and services tax (GST) rates on hotel rooms and limited support from the government in the last Budget are major concerns.
Homebuyers want the government to introduce a provision that will allow them to get full deduction of the interest component of their home loans.
Among the demands, startups and Nasscom want minimum alternative tax for eligible startups to be reduced to 9 percent from 15 percent
The top ask for the energy sector from the budget is for the Goods and Services Tax (GST) on petroleum products.
The government should act urgently on crypto regulations and give clarity on the bank privatisation plan.
The key factors to success for privatisation will however be the ability of the management to retain and grow the deposit base while instituting asset side strategies led by process changes and upgradation of employee skills.
Some positive impact is also expected on Real Estate Investment Trusts, given the permitted flexibility to raise debt from Foreign Portfolio Investors, which broadens funding avenues and enables lower cost financing.
NBFCs stand to benefit from the reduction in the minimum loan size for recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
Taxing cigarettes comes as an easy alternative to garner additional revenues. Grant of infrastructure status for hotels, restaurants would lower the cost of funds.
Measures to boost demand from the real estate sector may also be expected in the budget.
Infrastructure project financing in India is predominantly from the banking sector and a few infrastructure NBFCs. It is important to strengthen the existing infrastructure NBFCs for enhancing their ability to finance projects.
To boost investments in the sector, in addition to the viability gap funding already announced, tax incentives for private sector investments in modernising medical facilities and developing greenfield hospitals will be a welcome step.
With respect to project financing, the National Investment and Infrastructure Fund can play a big role in channelising long-term funds – both debt and equity - to the infrastructure sector.
Freight demand revival, which will improve transporters’ profitability, depends on recovery in economic growth and the government’s spending, especially on infrastructure.
The formation of 10,000 new farmer producer organisations as proposed for fiscal 2021 can cater to only seven percent of the farming population. Also, the existing FPOs lack capacity, leadership and basic infrastructure for effective market participation.
The affordability of housing projects had been one of the major constraints for demand. Various states had provided time-bound relaxation in stamp duty on housing purchase, which was seen to have a positive impact on sales. The budget could consider further steps to improve affordability.
We expect the NBFC sector to grow at a moderate 7-9 percent in FY2022, essentially because of the funding-related concerns, even when demand is expected to be better enough to push the growth to the mid-double digits.
The industry expects financial aid and reduction in levies and taxes in the immediate near term to revitalise operations and boost passenger traffic, while in a longer time frame, the government needs to address India’s aviation infrastructure requirements.
There is a case for the government to relook at the existing FDI policy for multi-brand retail trade and raise the cap of FDI from the current level of 51 percent under the approval route.
It is expected that the government will continue to focus on reduced import dependence, and encourage investments to boost R&D and capital expenditure.
Low public health expenditure has led to the stage that India's out-of-pocket expenditure is one of the highest. This amounts to about 63 percent of total spending on health.