A growing economy gives greater leeway for Government spend, says Raamdeo Agrawal

"When tax collections grow, there is a lot in the hands of the government to spend."

Veteran investor Raamdeo Agrawal is confident of a robust and sustained bull run over the next 4-5 years and foresees a sizeable government spend that'll support growth. The Chairman and co-founder of Motilal Oswal Financial Services (MOFSL) told CNBC-TV18, "when tax collections rise, the government has a leeway to spend." He added, "when tax collections grow, there is a lot in the hands of the government to spend."

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"What matters is how well an economy does and how the government collects," Raamdeo Agrawal said. The GST tax collection for the month of November has come in at Rs 1.68 lakh crore, at a very strong growth rate of 15% YoY. "When you're a trillion dollar economy you can collect $150 billion as tax, when you're $4 trillion (economy) you can collect $600 billion and when you're $8 trillion (economy) in the next six-seven years, you'll be able to collect $1.5 trillion taxes," Raamdeo said in an interaction with the TV network on December 7. "This is an amazing time for Indian equities," he added.

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The stock market has been on an upswing ever since the results of five-state assembly elections came out, testing record highs. Reacting to the upmove, Raamdeo said that it may be tough to maintain the current pace of upward movement and stocks might take a brief breather after the record-breaking run up, but he has maintained that the market rally will continue till the 2024 Lok Sabha Elections.

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Raamdeo further said that the Indian stock market has been highly consistent in the last 20-25 years with a 12-14 percent of compounded return. "It is India's decade, corporate profits can also grow rapidly at 15-17 percent in this digital era," said the veteran investor.

India used to be called 'sone ki chidiya' centuries ago, and now it is the Indian stock market that befits the sobriquet, added Raamdeo Agrawal.

Read more about Raamdeo's latest investing ideas on Moneycontrol.