Daily Voice | Full budget likely to be more energetic for economic development, says Union AMC CEO

I would give it 10. Fiscal discipline is the highlight of the budget. Increase in capex and restricted borrowing should really support long term growth. Given the fact that this was a limited exercise, the Government has stayed away from populist measures even in the face of elections.

The spending is clearly focussed on areas that can support sustainable long term economic growth.

I would summarize the budget as “Prudent, growth oriented and pragmatic.”

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What are the hits and misses from the budget?

Hits: Fiscal prudence even with conservative estimates on nominal GDP and tax revenues. Increase in capex and infrastructure spending. The lower-than-expected fiscal deficit should also help in India getting rerated by the international credit rating agencies. Lower interest rates could stimulate private sector capex also.

There are no real misses since this is not a full budget and one did not expect any big announcements.

Which are the sectors to get majorly benefitted from the budget?

The budget is very positive for bond yields. Borrowing costs may go down for the corporate sector. Interest rate sensitive sectors such as infrastructure related sectors, banks, capital goods etc. may benefit.

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FY25 budget gap target at 5.1 percent of GDP. What is your take and do you have similar expectations?

The 5.1 percent is better than what most people expected and is a strong positive signal for the economy and the markets. The fiscal prudence is expected to bring down the cost of borrowing for both the government and for the private sector both domestically and in the international markets. There is also a tight leash on subsidies.

What are your views on electric vehicle (EV) and ancillary space after the budget?

We have been positive on the EV segment and remain convinced about the prospects. The budget has really reaffirmed our confidence in the prospects of this sector.

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After reading the interim budget, do you expect the full budget scheduled to be announced post general elections to be more energetic with a view to achieve strong economic growth in coming years?

Absolutely. The intent of the government has been clearly spelt out in this interim budget. The government will spend its resources on areas that spur long term growth and not on short term populist measures.

Infrastructure investments, support to manufacturing sector and to youth, women and farmers etc. are likely to boost employment generation also. The government has put out numbers on revenue and expenditure that appear to be conservative and which can be achieved.

Do you expect the government to keep focussing more on infrastructure space given the increasing capex outlay for FY25?

There is a very clear indication that the government will continue to focus on infrastructure growth. There is a 11 percent growth in capex in this interim budget.

The railways are expected to continue to get upgraded. The subsidies are expected to be marginally lower. The intent of the government clearly seems to be make India a Developed Country by 2047. Infrastructure development is an integral part of it.

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