EVs are no doubt seen as the major push factor, in terms of the opportunities going forward as envisaged by the Budget 2022.
The markets ended the day with a thumbs up to the Budget 2022. Both the Nifty and the Sensex closed trade on February 1 with one percent plus gains on higher capital expenditure outlay, push towards infrastructure growth and a systematic plan to boost the economic situation across rural India.
While there might not be great triggers in terms of individual stock action, the broad-based push towards revving up a consumption-led economic revival is what seems to be giving an impetus to the positive sentiment. Speaking specifically for what it holds in terms of the auto sector, Kishor Ostwal, CMD, CNI Research points out that that the “Budget 2022 is very pragmatic and growth-oriented. It has specific provisioning for inter-changing batteries for EVs. Also, steps have been outlined on green energy which means in the next decade, the Govt will give more emphasis on electric vehicles.”
EVs are no doubt seen as the major push factor, in terms of the opportunities going forward as envisaged by the Budget. AK Prabhakar, Head-Research, IDBI Capital Markets and Securities also corroborates the views and pointed out that how the “measures are geared towards long-term growth objectives and creating a significant push towards faster EV adoption. The Government has made it clear that they are not interested in doling our short-term goodies but focussed on creating opportunities for sustainable growth going forward.”
About Rs 7.50 lakh crore is being reserved for capital expenditure and for building the infrastructure, which is about 2.3 percent of the GDP. In real terms along with grants to states, Deven R Choksey, MD, KR Choksey Investment Managers explains that the “actual amount spent would be about 10.25 lakh crores or 4.1 percent of the GDP.” While the long-term 25-year positioning of the development and fund allocation could be interpreted either way, Choksey reiterates that, “Overall, the Budget 2022 is growth-oriented and reflects India’s long-term vision of sustainable 10 percent GDP growth on cumulative basis. It will lead to increase in consumption in the economy. It is about increasing employment, providing spending power in the hands of consumers which would lead to hike in industrial output and corporate profits.”
Moreover, market veterans believe that clean energy storage, battery swapping policy with inter-operability standards, recycling of waste, promoting sunrise industry like “AI, Drones, GPS, Green Energy, Clean Mobility are some of the thought-through initiatives that could attract new investments in the economy.”
Choksey feels, “When developed, these initiatives will result in spending the amount for material and manpower among others which would lead to generating newer demands for goods and services and employment. India in next 10 years is expected to achieve near-10 percent GDP growth.”
With gradual improvement in chip situation, Ostwal signs off saying that the prospects for the EV sector looks good, “One must keep in mind that the Budget size is now Rs 44 lakh crores as against Rs 39 lakh crores, which is massive. Also 25000 km new roads are being made. This augurs well for the sector.”
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