Budget rolls out uncluttered measures to fuel investments

Hyderabad: The Union Budget FY22 did not allow a good crisis to go to waste. Making up for the lack of a decisive fiscal stimulus in 2020, the budget has simultaneously rolled out uncluttered measures to stimulate investment, especially in infrastructure, healthcare, financial and select manufacturing sectors, and signalled progressive withdrawal of government from commercial activities. The budget is positive for the Indian equity market and could be neutral for the debt market if tactically implemented.

Giving growth a chance, limited fiscal deterioration and inflation risk. In 2020 India lagged most peers in terms of direct fiscal stimulus. The union budget FY22 made up for this and decisively opted to support growth and accepted a higher fiscal deficit for another year. Deteriorations of the fiscal situation are not as stark as figures might suggest since some traditionally off-budget items have been included in the budget this time around. With slacks in the economy, the inflationary risk is also limited, at least during FY22. Clear intent to exit pure commercial activities.

Apart from setting another ambitious target for divestment to fund the fiscal deficit, the government has reiterated its resolve to gradually withdraw from pure commercial activities and monetise idle assets. Focus on investment. The clear direction of the budget has been to stimulate investment, especially in infrastructure. Public investment has been boosted. Arrangements have been made to ensure greater availability of funding for private investment. Various schemes have been rolled out to facilitate greater corporate investment, especially in infrastructure and select manufacturing.

Positive for infra, financials, healthcare and select manufacturing. These are the sectors which would directly reap the positive impact of the budget. (Anand Rathi)