It is typical of markets to rally ahead of the budget proposals and see some profit taking once the measures are announced. This time, however, the Adani group stocks played spoilsport.
The key takeaway for me from the Budget 2023 proposals is that there is something for everybody. One key thing before any election budget is that the government takes care of the poor and the lower income strata of the society and ensures infrastructure creation. Proposals this time, too, did exactly just that.
That said, the estimates – be it for the gross domestic product (GDP) growth, fiscal deficit and therefore tax receipts etc. – are quite conservative. The government has been conservatively estimating growth numbers since the past few years; and this time, too, was no different. The huge capex outlay is a big boon, as it has a multiplier impact on the economy. It will not only create infrastructure, but will also create more employment.
Free food schemes have been continued, and this was expected. To add more spice to the proposals, the peak surcharge rate on tax has also been brought down. This is in addition to the rejigging of individual tax slabs in the new regime. Not tinkering with the long and short term capital gains tax structures is also a positive.
I don’t think it is a populist budget even as the calendar year 2023 has a number of state elections and the fact that this was the last full budget before we head into a general election next year. If the growth momentum picks up over the next few months, the government will be in a better place overall as far as managing the fiscal is concerned. The Rs 10 trillion capex plan and its impact will put India in a much better position over the next few years.
It is typical of markets to rally ahead of the budget proposals and see some profit taking once the measures are announced. This time, however, the Adani group stocks played spoilsport. There are reports that Switzerland-based investment banking company Credit Suisse has stopped accepting bonds of Adani group as collateral for margin loans to its private banking clients. This has created a flutter in the markets, which saw a sell-off as a result.
That said, one area that the Budget 2023 could have focused on is the National Pension Scheme (NPS). It should have been encouraged a bit more. Most state governments are talking of going back to the old pension scheme, which in my view has to be made unattractive now.
As things stand, infrastructure and allied sector is a big gainer from the Budget 2023 proposals. That apart, no tinkering in taxes is a positive step. Auto, defence, financials and all domestic-facing sectors should do well in the months ahead. In a nutshell, the budget ticked all checkboxes, but Adani group stocks played spoilsport.
This article is authored by UR Bhat, Co-Founder at Alphaniti (www.alphaniti.com)
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