"We feel this Budget can easily be given 8 on 10. We would call it progressive, growth-oriented and consistent with longer term objectives of simplification of tax structures and ease of doing business," Kunal Bhakta, Co-Founder of First Water Capital Fund tells Moneycontrol.
A seasoned investment professional with 15-year of experience in capital markets feels the double whammy for the life insurance sector - disincentive for the old regime and taxation of returns from annual premiums above Rs 5 lakh - came in a disappointing factor, which is structural and should definitely result in a derating of the sectoral valuations.
What is the most surprising element in the Union Budget?
The Union Budget did not really have any real surprises as such. It came out as we had expected in terms of the focus on infrastructure, housing and so on.
Have you spotted any solid themes post Budget?
Infrastructure continues to remain as the most solid theme in the budget. Allocation to railways has also seen a sizeable jump against last year.
According to some studies, an additional 1 percent investment in infrastructure capex leads to a 2 percent boost in GDP. This is based on the outcome achieved by several nations throughout the previous few years.
The capital expenditure has been raised by around 33 percent. If you look at the allocation, road transportation and highways received Rs 2.7 lakh crore, an increase of 129 percent from the previous year, while railways received Rs 2.4 lakh crore, an increase of 119 percent from last year.
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We still have high hopes for several of the listed EPC companies and these are well poised to benefit from government spending on infrastructure. We expect their order books to grow at northwards of 15-20 percent per annum.
What is your rating for Budget 2023 on a scale of 1-10?
We feel this budget can easily be given 8 on 10. We would call it progressive, growth-oriented and consistent with longer term objectives of simplification of tax structures and ease of doing business.
While contentious issues like the super-rich tax (surcharge) have been addressed, some changes have been brought about in the capital gains exemption (in cases of reinvestment), where the exempt amount is now capped at Rs 10 crore. The latter should aid in offsetting some of the lower tax collections from lower surcharge and seems like a fair policy change.
Your thoughts on the Amrit kaal Budget and 7 priorities?
Like we mentioned earlier, this Budget scores high on multiple counts. The seven priorities outlined seem to lay the foundation for inclusive and sustainable growth. If the government manages to deliver on these priorities, we should see much better times ahead for all sections of the society and for the Indian economy.
Have you spotted any disappointing thing in the Budget?
Yes, the double whammy for the life insurance sector (disincentive for the old regime and taxation of returns from annual premiums above Rs 5 lakh) came in a disappointing factor, is structural and should definitely result in a derating of the sectoral valuations.
Do you think it is the time to bet on the tourism and travel sector?
Most travel and tourism companies have already risen significantly in the last few quarters. Last year, RevPar surpassed the pre-covid level, though occupancy remains slightly lower than in 2019 in some of the states.
The budgetary proposal to increase TCS (tax collected at source) from 5 percent to 20 percent on overseas tour packages is quite a dampener and will hit the tourism industry hard. We would not be in a hurry to bet on the sector at this juncture.
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