The FY23 Budget presented in CY22 was hailed as positive by markets. It had strong elements of permanency in economic growth as much of the expenditure was deployed on a balance-sheet basis, said Rajesh Cheruvu, Managing Director and Chief Investment Officer at LGT Wealth India.
"Arguably, business models based on the expansion of the balance sheet on the fixed asset side can be construed to have a higher enterprise value rather than a simple expansion of reserves or cash accretion. This is because there is the belief that fixed assets should, over time, churn out better overall business returns than cash if deployed correctly," he said.
"Expansion of reserves (without fixed assets increasing) could mean that the business is more transaction-focused (i.e. relying more on the profit & loss to feed the balance sheet directly). Hence, the FY23 Budget, which focused on balance sheet expansion, brought cheer to market participants. The Government has lived up to the CAPEX spree, with FYTD23 investments meeting the pro-rata FY23 expectations. There has so far been a slew of CAPEX announcements, projects tendered and even awarded, and participation from the private space has been very vigorous," Cheruvu added.