Navin Agarwal, who is MD & CEO at Motilal Oswal Asset Management Company, says given the increased focus on capex and the realisation that the government will have to do the heavy lifting, the budget seems to be totally growth-oriented.
This budget was an extension of last year’s with a significant focus on capex.
There were no specific negative announcements but “no mention of any tax reforms for bonds can be construed as unfavourable as the market was expecting them,” says Agarwal in an interview with Moneycontrol.
Edited excerpts:
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What is your rating of the budget and the reason for it? Has the budget met your expectations?
This budget was an extension of last year’s with a significant focus on capex whilst maintaining the fiscal consolidation path. Hence, I would rate it as 9/10 budget.
Do you think it is a growth-oriented budget? Has the government done a fine balancing act?
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Given the increased focus on capex and the realisation that the government will have to do the heavy lifting, the budget seems to be totally growth-oriented. The fact that the finance minister was able to increase capex by almost 35 percent whilst managing the fiscal deficit targets clearly shows fine balance.
What are the most surprising announcements made by finance minister Nirmala Sitharaman in her budget speech?
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There were very few surprises in the budget, prominent amongst them are:
a) By forming a taxation system for digital assets, the government has recognised its legality; hence the government has decided to regulate and manage it rather than stop it.
b) Increased Fame (Faster Adoption and Manufacturing of Electric Vehicles) subsidy further, which shows the government’s focus on electrical vehicles.
Have you spotted any negative announcements (with respect to the equity market, FIIs, retail investors, etc.) in the budget speech?
There were no specific negative announcements in the budget but no mention of any tax reforms for bonds can be construed as unfavourable as the market was expecting them.
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Especially after the budget, what are the sectors to bet on or sectors that one must have in the portfolio, and why?
The following sectors in my view could be good to bet on due to this budget:
a) Announcement of increased capex, as well as highway expansion target of 25 km, is positive for the capital goods and infrastructure sector as well as banking and financial sector
b) Increased allocation to PM Awas Yozna is positive for the housing sector as well as the cement sector
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c) Increased ECLGS (Emergency Credit Line Guarantee Scheme) line of Rs 50,000 crore focused on hospitality could be a positive for the hospitality-related industry.
Do you think this budget has put a clear roadmap for India to achieve $ 5 trillion target by 2024-25?
I can’t comment on a fixed number; however, the government is clearly focused on investments to drive economic growth. Despite multiple state elections, the budget didn’t have too many social announcements.
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Are you happy with the government’s divestment programme set in the budget?
Given that the government has shifted its divestment of LIC target to FY23, the target for FY22 now seems reasonable and the government may be on track to achieve that.
As per your reading, what are the missing factors from the budget?
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The government could have talked about tax reforms for the bond markets, which could have helped the inclusion of Indian bonds in the global index.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
