From Amar Ambani,
The budget has rightly decided to focus on economic growth by increasing spending and allowing a larger budget deficit during these pandemic times. What is important is that spending on investment is much higher at 2.5% of GDP compared to 1.7% last year, a step in the right direction. Domestic manufacturing will be a big engine of growth as previous corporate tax cuts, corrections to reverse tariff structures and much more subsidies are made on the PLi front.
Alongside the widely anticipated increases in housing, infrastructure, health and textiles allocation, the move to curb the tedious tax audit and firm stance on the privatization of certain PSUs, the creation of ARCs for non-performing loans and the monetization of state land banks are steps in the right direction .
What appealed to the stock market most was the lack of measures like wealth tax or increases in the LTCG for equity holdings. Unless the small print contains devils, the budget was kept simple and the right cards were played.
However, bond yields will inevitably tighten in the face of the government’s expanded loan program and inflationary budgetary expansion.
(The author is Senior President at Yes Securities)
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