As Union Budget 2022 date is fast approaching, various industry experts are busy forwarding their demands to Finance Minister Nirmala Sitharaman who will present the Budget on February 1. While banking sector is seeking more income tax relaxation on home loans, stock market players are seeking measures from the Modi government to attract more foreign investment.
They said that potential withdrawal of liquidity by global central banks, along with an increase in interest rates worldwide, could hit foreign investments into India in the near future. Therefore, FM Sitharaman should announce measures in Budget 2022 that may include relaxation in KYC norms, etc. to attract FPIs (foreign portfolio investors).
“This year’s budget will likely focus on a road map to recovery for the economy through job creation, demand generation and driving economic growth. Potential withdrawal of liquidity by global central Banks, along with an increase in interest rates worldwide, could hit foreign investments into India in the near future,” said Dhiraj Relli, MD & CEO at HDFC Securities.
Against this backdrop, Relli believes this year’s budget provisions will have to give out the right signals to both foreign investors and the Indian citizenry.
“Kick starting growth in an era of global slowdown with limited fiscal flexibility are the biggest challenges that the Budget will seek to address. One however wishes that reformist image of the Govt does not get muted in this Budget for political reasons,” he added.
On measures that can attract foreign investors towards Indian stock market, Anuj Gupta, vice President at IIFL Securities said that FPIs often complaint about the tardy KYC norms in India. “The Indian government has given some relaxation to FPIs in their KYC norms but in the upcoming budget, the Narendra Modi government can further relax the norms to attract foreign portfolio investment in the Indian stock market.”
Gupta of IIFL Securities strongly batted for allowing FPIs to buy stock from the open market with certain restrictions. He said that the Indian government should think of allowing FPIs to open Demat Account with brokers registered in India keeping a cap on their buying limit.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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