Budget 2025 was disappointing on capex spend, ball in monetary policy court to drive growth: Pankaj Tibrewal

According to him, the markets had been expecting a fiscal deficit target for FY26 at 4.8 percent of the GDP, while the FM was "hawkish" on the fiscal side.

With the Budget 2025 disappointing on the capital expenditure side, the ball is in the central bank's court to push for economic growth, according to Pankaj Tibrewal, Founder and chief investment officer of IKIGAI Asset Manager.

He was talking to Moneycontrol on February 1, in a post-Budget conversation.

Tibrewal said that, "Clearly this year has not been that great on the capex side, and that has led to the slowdown going into the Union Budget. The expectation was a 15 percent to 20 percent growth for FY26 over (FY25's) revised estimate, which is about 10.18 lakh crores (but the government has allocated) about Rs 11.2 lakh crore, which is approximately the July (for FY25) number.... maybe plus minus few 1000 crores. So, that has been a bit of a dampener in terms of sentiment... that we can be in our low growth environment for some time now, till the private sector capex picks up."

The fiscal deficit target also did not give cause for celebration, be pointed out.

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According to him, the markets had been expecting a fiscal deficit target for FY26 at 4.8 percent of the GDP, while the FM was "hawkish" on the fiscal side and announced the deficit target at 4.4 percent, which meant another 40 basis points of fiscal consolidation. He added, "Markets were expecting some relaxation on fiscal side to get a boost to a slowing economy."

The "only point of joy" the Budget delivered came from the boost to the consumption theme by adding to the household income. In the Budget, the FM made income up to Rs 12 lakh tax free through rebates.

Given the Budget's focus, according to Tibrewal the monetary lever will now need to deliver significantly. He said, "the ball is in the monetary side, I think we can do substantially there." Between February 6 and 7, the Reserve Bank of India (RBI's) Monetary Policy Committee is to meet, and the market is expecting a rate cut to support growth.

Tibrewal said that his team believes that there is a lot of "monetary room as you move ahead into this next 12 months".

He said, "Markets were expecting, fiscal and monetary, fiscal didn't that much happen, especially on the that's where the markets are slightly disappointed on the overall capex numbers".