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Budget 2022: Market expects growth push as global financial tightening looms

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Budget 2022: Market expects growth push as global financial tightening looms

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Finance Minister Nirmala Sitharaman will present her fourth Budget today, February 1 - for the fiscal year 2022-23. CNBC-TV18 spoke to Jahangir Aziz, Head of Emerging Markets Economic Research and Commodities, JPMorgan, and Sonal Varma, MD and Chief Economist- India and Asia Ex-Japan, Nomura Financial Advisory and Securities, to understand what their expectations from the Union Budget are.

Finance Minister Nirmala Sitharaman will be presenting her fourth Union Budget today, on February 1, for the fiscal year 2022-23. CNBC-TV18 spoke to Jahangir Aziz, Head of Emerging Markets Economic Research and Commodities, JPMorgan, and Sonal Varma, MD and Chief Economist- India and Asia Ex-Japan, Nomura Financial Advisory and Securities, to understand what measures would help the economy and also figure out what their expectations from the Budget are.
Aziz expects growth to be around 9 percent. According to him, the amount of resilience that emerging markets (EMs) have toward the US Fed tightening will act as a major headwind for them.
He said, “We expect growth to be around 9 percent. So, broadly in the ballpark, the big sort of headwind is whether or not EMs generally, but India specifically, whether it will be resilient to the kind of global financial conditions- tightening, that one is fearing."
Aziz believes a key determining factor in this fiscal will be the impending rate hikes. “In a year in which global financial conditions are set to tighten very sharply as we go through 2022, we have seven rate hikes between March of 2022 and March of 2023,” said Aziz.
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Meanwhile, Varma believes some amount of welfare is needed. She believes a conducive environment that is created with the help of private investment will be the perfect set-up to generate jobs.
“We need to create jobs. So if you want to create jobs, you can create the environment for private investments to pick up but at the same time, the push that we have seen on the capex, I am in the camp that this push should continue going forward as well. That should be a priority going forward,” said Varma.
In terms of government’s divestment target for FY23, Varma said, “For the next financial year, there is the asset monetization pipeline, and it will be good to get more clarity on what are the different projects that the government’s different departments or ministries are looking to monetize; Also going a bit early on, with respect to the planned disinvestments rather than punching it all at the end will give greater confidence in the government's ability to actually meet the targets that they set.”
For the full interview, watch the accompanying video.
For all the latest updates on Union Budget 2022, follow our LIVE blog here
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