BUDGET 2022 Analysis
Table Of Content
The Union Budget for the fiscal year 2022-23 is primarily focused on Infrastructure, Capital Expenditure & generating Employment. This is indeed a positive step towards long-term economic development.
DISINVESTMENT TARGETS
One of the prime highlights of this budget is the government plan to collect Rs 65,000 crore from disinvestment in state-owned companies in 2022-23 which is different from the Rs 1.75 Lakh Crore of the amount which was set out for 2021-22.
The economists had pegged the disinvestment target for the next fiscal year at Rs 1.2-1.5 lakh crore.
Fintoo’s View
Considering that the disinvestment target for this year is comparatively lower than the last year, along with the plan to launch LIC’s IPO doesn’t give clarity about the exact amount that the government is planning to raise via disinvestment.
There may be two reasons for this, either the government may divide the entire issue of LIC’s IPO into two parts considering its large size, or the government could have moderated its expectations on the valuations front.
ECONOMY
The fiscal deficit for FY22 is revised to 6.9% from 6.8% as per the earlier budgeted estimates (BE).
FY23 BE of fiscal deficit is pegged at 6.4%.
In the absence of desired growth, the fiscal deficit remains the single most important concern for the market.
Fintoo’s View
Equity markets corrected sharply intraday from the day’s high but recovered back quickly and despite the higher Tax Collections and Disinvestment, the deficit remains at elevated levels.
FINANCE
- Emergency credit line guarantee scheme (ECLGS) for small and medium-sized businesses to be extended to March 2023 and amount is increased by Rs 50,000 cr to Rs 5,00,000 cr, covering both Banks and NBFCs.
- Energy transition and climate action will be a major government priority.
- The Public Issue of Life Insurance Corporation is expected shortly.
- The increased allocation under PMAY for affordable housing to Rs 48,000 crore is beneficial for home loan providers.
Fintoo’s View
Just like the positive effect of the extension of ECLGS that will help several MSMEs to recover from the slump and restore their momentum, the energy transition and increase in the house allocations for affordable housing will also have positive effects.
DEFENCE
- Private industry will be encouraged to take up the design & development of defence platforms and equipment along with DRDO through the SPV model
- 68% of the capital budget for procurement in defence will be for domestic procurement in 2022-23 (vs 58% last fiscal)
Fintoo’s View
Whether is the SPV model or the increase in the capital budget for procurement, both initiatives will prove beneficial for the defence sector.
INFRASTRUCTURE
- The outlay for capital expenditure increased 24% YoY to Rs7.5 crore in FY23E
- Allocation under Jal Jeevan Mission Rs. 60,000 crores were made to cover the remaining 3.8 crore households
- PM Gati Shakti Master Plan for Expressways will be formulated in FY23E to facilitate faster movement of people and goods
- The National Highways network will be expanded by 25,000 km in FY23
Fintoo’s View
The amount of focus that this budget has on infrastructure Capex is undoubtedly a plus point. This may result in a big surge in private sector Capex in the near future.
The only area of improvement that we feel is that the government could have given a further boost to the housing sector, considering its strong multiplier effect on the economy.
Automobile
- A battery-swapping policy to be brought out with interoperability standards to boost the EV ecosystem.
- Finance Minister Nirmala Sitharaman announced a voluntary vehicle scrapping policy, to phase out old and unfit vehicles. Details of the scheme will be separately shared by the Ministry.
- Push on Ethanol blending: Additional basic excise duty of Rs. 2 per litre on unblended petrol from Oct 2022.
Fintoo’s View
The new battery-swapping policy will definitely empower the two-wheeler EV industry.
Railways
The government has decided to manufacture 400 new, energy-efficient Vande Bharat trains over the next three years.
Fintoo’s View
IRCTC could be a major beneficiary with boast to Railways and the addition of incremental trains.
Wish to get more insights about the union budget 2022-23? Check out our budget exclusive video
Read Our Blog On Union Budget 2022
Connect with our experts at Online@fintoo.in or +919699800600.
A financial planning platform where you can plan all your goals, cash flows, expenses management, etc., which provides you advisory on the go. Unbiased and with uttermost data security, create your Financial Planning without any cost on: http://bit.ly/Robo-Fintoo
Disclaimer: The views shared in blogs are based on personal opinion and does not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Making an investment using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.