Friday, March 29

India unveils higher spending for infrastructure in growth budget


Article content

India unveiled on Tuesday a bigger budget of 39.45 trillion rupee ($529.7 billion) for the coming fiscal year, stepping up investment on highways and affordable housing to put growth on a firmer footing as the economy recovers from the pandemic.

The government has projected GDP growth at 8% to 8.5% compared with an estimated 9.2% for the current fiscal year and a 6.6% contraction the previous year.

All macro indicators indicated that Asia’s third-largest economy was well-placed to face challenges, helped by improving farm and industrial output growth, the government’s annual economic survey said on Monday.

Advertisement

Article content

Here are some reactions from Indian businesses, economists and analysts:

GARIMA KAPOOR, ECONOMIST – INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI

“The budget announced policy programs to provide right impetus to growth and make India future-ready. Capital expenditure chiefly on infrastructure, digitisation, energy transition and inclusive growth are clearly four key pillars of growth.

“The 35% growth in capex spending over FY22 budget estimate, (19% growth vs FY22RE) is encouraging, but the effective capex of 10.37 trillion rupees including off balance sheet spending is lower compared with FY22 budget estimate, although we need to check the fine print. It is a growth-oriented budget.”

SUNDARA RAJAN TK, PARTNER AT DVS ADVISORS LLP, CHENNAI

Advertisement

Article content

“The announcement of tax at 30% on digital assets, coupled with the government launching its own digital currency, is an indication the government intends to discourage it and that only high-net-worth individuals (HNI) could make such investments and that the center shall not permit cryptos as a currency.

“The capping of surcharge at 15% is welcome and though no separate relief was given to HNIs, this would also be favorable to such HNIs with high-capital-gain income.

“On the litigation front, the announcement that appeals shall not be made in case of similar issues of law pending before the High Court and Supreme Court is an important step in reducing the litigation.”

KETAN DALAL, MANAGING DIRECTOR, KATALYST ADVISORS, MUMBAI

Advertisement

Article content

“The revised fiscal deficit is expected to be 6.9% of GDP in FY21-22, as against expected at 6.8%; the imperatives of government spend are apparent, and hence, in spite of buoyancy in tax collections, there is fiscal pressure.

“Given the increase in input costs, fuel and freight costs, there is likely to be margin squeeze on companies; this is likely to lead to pressure on tax collections, and consequently, it’s a moot point as to whether tax collection estimates can be met . Hence, whether the estimated fiscal deficit can be contained at 6.4% in FY22-23, and tapering towards 4.5% in FY25-26 seems to be a challenge.”

RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI

“The budget has consciously recognized the need to nurture growth and its fiscal deficit levels for FY22 & FY23 are growth-supportive. Measures announced for infra building including roads and railways and renewable energy sectors, MSMEs, farm sector represent the need of the hour. Measures to reduce the imports of oilseeds and defense equipment are positive for rupee in the long term.”

UPASNA BHARDWAJ, SENIOR ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

“The fiscal outcome is broadly in line with our expectations with the government having continued its focus on infrastructure and rural demand. As expected, the government has refrained from a sharp consolidation. While the fiscal expansion is expected to be pro-growth, the heavy supply is expected to worry the bond markets.” (Reporting by Chandini Monnappa, Abhirup Roy, Neha Arora, Rama Venkat in New Delhi, Bengaluru and Mumbai; Editing by Sherry Jacob-Phillips)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



financialpost.com