The 2021 budget was a growth-dominated budget and re-evaluated the market. Is there anything specific that might come in this year’s budget that might excite the market?
From a market perspective, today our trade, agriculture, private investment and government spending are above pre-pandemic levels, but the main driver of our economic consumption is below pre-pandemic levels. pandemic. It is clear that the budget must support consumption, especially at the bottom of the pyramid. We have seen the wonders that MNREGA has created in the rural economy. Can we think of launching an urban MNREGA solution targeted in particular at those who are at the bottom of the pyramid and who have been negatively impacted by the pandemic?
The second thing will be to provide tax incentives or some kind of support for the housing sector. Housing employs the maximum number of people. It is the least dependent on imports and a boost can create a multiplier effect in the economy. When the government of Maharashtra gives stamp duty concessions for a period of time, it really promotes home purchases and helps liquidate inventory. We can think of a variety of things to support housing in the budget, which will create a multiplier effect and the bottom of the pyramid will get jobs.
These days, if you don’t talk about environment, social and governance (ESG), it’s hard to maintain premium valuations. I expect the budget to highlight how India is promoting ESG not only in its companies, but also across the country. We are the only country in the world to have achieved its Paris score target of 40% renewable energy.
The last thing will be related to Jan Nivesh Yojana – similar to Jan Dhan Yojana. Jan Dhan assures that millions of Indians who had no access to the banking system had bank accounts. We now need to move from bank accounts to investing.
To give a small example, the Indians imported in only 21 years of this century, 433 billion dollars of gold. These are net imports after making an assumption on gold jewelry exports. As these 433 billion dollars were paid in foreign currencies, this led to an outflow of savings from India to other countries. This amount is greater than what we have received in foreign direct investment (FDI) or foreign portfolio investment (FPI) over the past 21 years.
We are a net exporter of capital when we desperately need money to invest in our own country. Now, how do you get people to switch from buying gold to buying financial products? We need to make buying financial products as easy as buying gold. We need to educate people that gold is not the panacea for your savings and investment solutions. There are other options like financial products from mutual funds to insurance companies to bank deposits.
If we can create a growth-friendly budget that supports consumption that encourages national savings to finance national investments and that talks about government environmental, social and governance initiatives, I have no doubt that we can maintain our premium valuation.