Rakesh Jhunjhunwala on Budget 2022 – A bold push for choosing Growth and Fiscal Prudence over Populism

The market veteran is bullish on India growth story with corporate profits reaching 8 % of GDP in the next five years.

India’s most celebrated investor Rakesh Jhunjhunwla has no qualms about the long term vision of the Government and its impact on the market. The Union Budget 2022 has been a bold political statement of the Government for choosing Growth and Fiscal Prudence over Populism, according to the market veteran. His faith was validated by the market reaction post Budget announcements, where the benchmark indices Sensex rose 848.40 points or 1.46% to close at 58,862.56, while Nifty advanced 237 points or 1.37% to 17,576.85.

Few key highlights of his statements on Budget give an insight into what to expect of the Indian Markets?

• Tax on GDP ratio grew by 23.76% on YoY basis for FY 2022 on account of low base and are estimated to grow at 9.6% in FY 2023. Jhunjhunwala feels the healthy estimate though conservative by the Government will give the much-needed impetus to social welfare and infrastructure spending by the Government.  

• By staying away from freebies such as tax cuts or other SOPs, the growth vision of the Budget and the heavy capex planned are steered for job creation and the overall prosperity of the country. 

• PM Gatishakti – The infrastructure plans in the Budget will definitely boost the competitiveness of our industries by making them more efficient.  

• Jhunjhunwala feels that the PLI schemes can be a game-changer for the Make in India initiative of the Government. Till now PLI Scheme has been floated for 14 sectors and FM foresees that it could potentially generate 6 million jobs in the next 5 years. 

• Jhunjhunwala is optimistic about Corporate Profits gliding to 8% of the GDP in the next five years. 

• Inflation is a known demon the market is prepared for it, opines the ace investor. An interest rate hike may hurt the housing sector. 

• On the recent meltdown, he feels it was a healthy correction in the unreasonable valuation of the new age cash-burning tech companies. He even hinted at the death of cryptocurrencies. 

In all, true to his image he remains bullish in India’s growth story with the only concerns over geopolitical affairs and the stability of the Modi government at the centre as vital for the bull market.