At Rs 61,000 crore - Rs 51,000 crore of divestment receipts and Rs 10,000 crore of other receipts - India appears a little too optimistic about its target divestment, and more so because of the global macro challenges and uncertainties, according to Kedar Kadam, Director – Listed Investments at Waterfield Advisors.
With more than 14 years of work experience in global and Indian capital markets, Kedar believes that after the Union Budget FY24, agriculture, tourism, infrastructure, electric mobility, cement and green energy are the sectors to bet on. Excerpts from an interaction with Moneycontrol:
How would you rate Budget 2023 on a scale of 1 to 10?
We believe the finance minister delivered a budget that exceeded the expectations of market participants and economists. Despite the global macro challenges and uncertainties, the FY2024 Union Budget has done a fine balancing act between fiscal consolidation, increasing attractiveness of the new personal income tax regime, and continued higher capital expenditure.
The incentives and rebates in the new income tax regime, a sharp hike in capital investments, and the biggest ever outlay in railways (Rs 2.4 lakh crore) remained key takeaways from the budget alongside prudent fiscal management. The higher government capital spending (33 percent) to Rs 10 lakh crore will enable the country to expand its network of roads, ports, and airports, and make it an attractive investment destination. On the flip side, the aggressive government spending could indicate that the underlying private capex recovery may not sustain.
The Budget will go down as a balanced budget with no splurging frills despite it being the last-full budget before the general elections in CY24. Overall, I would rate the budget 8/10. A budget for growth & fiscal prudence.
Did you find any surprise element in the Budget?
To a large extent, the proposals in the Budget were aligned with the market expectations. The government stuck to its script of being fiscally prudent. No major populist steps were announced by the FM. The Budget tried to achieve a fine balance between the growth of manufacturing, services, consumption, and long-term vision while being prudent.
The one big surprise was the capex target of Rs 10 lakh crore, which was way above street expectations of Rs 7.7-8 lakh crore.
Do you think the divestment target set for FY24 looks achievable?
Pegged at Rs 61,000 crore (Rs 51,000 crore divestment receipts and Rs 10,000 crore other receipts), the divestment target seems a little too optimistic, considering the global macro challenges and uncertainties.
Should one bet on infrastructure space, especially after the Budget?
Infrastructure has definitely emerged as a clear winner after the Budget. Crucial to boosting last-mile connectivity, India has decided to build 50 additional airports, heliports, and aerodromes, and identified 100 fresh projects. Railways will benefit from a record capital outlay of Rs 2.4 lakh crore. This is a win for airport operators and large construction companies.
Do you think the Budget has given a strong and healthy support to the market?
Yes, the Budget has given healthy support to the market, hence ensuring, that India’s growth story remains one of the best medium- to long-term growth stories in a world facing structural and demographic challenges. India is not just a narrative, but it is backed by numbers and visible signs of robust economy. Instead of boosting consumption, the focus is more on creating employment and making India a manufacturing hub.
What are the sectors to bet on, especially after the Budget?
Agriculture (increased government spending), tourism (50 select destinations to promote domestic tourism), infrastructure, electric mobility (import exemptions), cement and green energy (Rs 35,000 crore investment in energy transition and carbon neutrality) are the sectors to bet on.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.