The Union Budget for 2021-22 is likely to be tabled in Parliament on February 1, 2021. This budget will be interesting to watch on how Finance Minister Nirmala Sitharaman plans to reboot the Indian economy already battered by COVID-19 pandemic. FM Sitharaman on Tuesday said the forthcoming Budget for 2021-22 will sustain the momentum of public spending on infrastructure and have a “vibrancy” to ensure the economic revival continues. She also said that the pace of divestment will soon pick up in the coming months. From the Indian share market perspective, the last seven years have been mixed under the Narendra Modi-led government. The first Union Budget 2014 under the Modi government was presented by then Finance Minister Arun Jaitley on July 10, 2014. In the last seven years, the Budget year 2015-16 was the only year when the 30-share index Sensex gave a negative return, with a fall of 21 per cent.
2014-15: Narendra Modi-led NDA comes to power
The Narendra Modi-led National Democratic Alliance (NDA) came to power in 2014, defeating the Congress-led United Progressive Alliance (UPA) in the Lok Sabha election. The year witnessed a host of events such as changes to the labour laws, foreign investment in infrastructure and real estate sectors, the Reserve Bank of India’s (RBI) fight against inflation, ‘Make in India’ initiative, etc. From July 10, 2014, to February 27, 2015, the S&P BSE Sensex gained 14.53 per cent during the budget year.
2015-16: Complicated year for Indian share market
The budget year 2015 was a complicated year for the Indian stock markets as the events such as muted corporate earnings, subnormal monsoons, fall in commodity and oil prices along with interest rate cuts by the central bank, dented the investor sentiment. All these events led to a fall of 21.27 per cent in the S&P BSE Sensex from February 28, 2015, to February 26, 2016.
The main event of the Budget year 2016-17 was demonetisation. Prime Minister Narendra Modi announced the withdrawal of the legal tender status of the Rs 500 and Rs 1,000 currency notes on November 8, 2016, to deal with black money issues. However, in September, the Indian army attacked some terror camps on the other side of the border with Pakistan, which made investors cautious over the rising geopolitical tensions between both countries. Globally, Donald Trump won the US Presidential election 2016. During this budget year from February 29, 2016, to January 31, 2017, the S&P BSE Sensex rose 19 per cent.
Indian stock market benchmark BSE Sensex zoomed 30 per cent in the period from February 1, 2017, to January 31, 2018. The Budget year 2017-18 saw the implementation of Goods and Services Tax (GST) and the victory of Bhartiya Janta Party (BJP) in assembly elections in the key states such as Uttar Pradesh, Gujarat and Himachal Pradesh.
2018-19: Imposition of LTCG on investments
The budget year 2018-19 was highly volatile for the Indian equities, as BSE Sensex just gained over half a per cent, 0.57 per cent. The year witnessed the imposition of Long term capital gains (LTCG) tax on the investments, resignation of RBI governor Urjit Patel, US-China trade deal which kept the investors on tenterhook.
2019-20: Narendra Modi-led govt wins Lok Sabha election for second term
From February 1, 2019, to February 1, 2020, S&P BSE Sensex gained 11.75 per cent. This budget year Indian stock markets witnessed Lok Sabha election 2019, slowing economic growth, massive corporate tax rate cuts, tussle between the RBI and the government, the resignation of the RBI deputy governor Viral Acharya, full Union Budget, a total of 135 bps repo rate cut, Ayodhya verdict, abrogation of Article 370, US-China trade deal, were among the major triggers.
2020-21: Coronavirus pandemic
COVID-19 pandemic changed the way businesses operate in the country. In an effort to curb this fast-spreading pandemic, India went on a nationwide lockdown from March 24, 2020. But before that, this disease had already peaked in some European countries. On March 23, Indian share markets suffered a massive sell-off. In the early deals on that day, trading in the share market was halted for 45 minutes as the Sensex hit a lower circuit limit of 10 per cent. That day, the S&P BSE Sensex plunged 3,935 points or over 13 per cent to settle at 25,981. But since then, Indian benchmarks have recovered and are now trading at record high levels. Sensex’ year-to-date (YTD) returns from February 1, 2019 to December 16, 2020 (opening level) is 17.21 per cent.