Rs 11.11 lakh cr – a number which has caught the eye of many. What do you make of the current outlay and the impact it will have on the economy?
Sachin Bajaj: Rs 11.11 lakh crore is the capital expenditure target for the next fiscal year. While the growth of 17% for FY25 looks a bit lower when compared to the current financial year, however, if we look at the capex for FY21, the same number was Rs 4.1 lakh crore, i.e., almost a 3x increase in 4 years.The pace of the capex increase is slower when compared with the past two years, which means the government now expects the private sector to participate and increase their capex spending.

With a focus on fiscal prudence, there is not much room for the government to increase public spending. In this context, giving priority to capital expenditure over revenue expenditure is commendable and highlights the government’s focus on sustaining the long-term growth of the economy. The ratio of capex to GDP is estimated to be at 3.4%, as against 3.3% in FY24.

A lower-than-expected fiscal deficit target of 5.1% of GDP for FY25 and even lower 4.5% by 2025-26 – how do you read this?
Sachin Bajaj: It is a welcome development, as achieving a sustainable debt-to-GDP ratio is very important from a long-term macroeconomic stability perspective.

Even RBI Governor Mr. Das mentioned that lower borrowing by the government will help in achieving the 4% CPI target in a durable manner.

In the last 3 years, the government has done much of the heavy lifting on the capex front, and going forward, if the government is focusing on fiscal consolidation to reduce overall debt to GDP, private sector capex must pick up to sustain the current growth trajectory.

What is you call on fixed income space? Yield dropped post Budget – does that hint something?
Sachin Bajaj: The Union budget focused on fiscal consolidation and refrained from any populist announcements.

The budget was non-inflationary, which should allow the RBI to start its rate-cutting cycle as it will become more confident of achieving the 4% CPI target in a durable manner.The drop in yield was on account of a positive surprise from fiscal consolidation and lower gross borrowing compared to market expectations.

Which sectors are likely to benefit the most from Budget 2024?
Sachin Bajaj: Fiscal consolidation, continuation of capex growth, and focus on energy transition, housing, tourism, healthcare, and railways are the key themes from the budget.

These sectors are already in favor and are expected to continue to remain strong in the coming years.

The focus on the power and energy sectors continues and will benefit the entire value chain. A higher allocation towards the promotion of domestic tourism will benefit travel-related services like hotels, airlines, and airports.

The finance minister spoke of a mid-income housing scheme, details of which will be shared later, that will benefit real estate, materials, and related value chains, including housing finance companies.

The lower market interest rates in the coming year due to fiscal consolidation, India’s inclusion in the global bond index will benefit rate-sensitive sectors such as autos, real estate, etc.

What is your take on the MPC meeting outcome? What does it tell about the interest rate trajectory?
Sachin Bajaj: The MPC meeting was along expected lines, as the market was expecting status quo on all fronts in the meeting. One interesting observation was the dissent among members on both stances and rates.

One of the MPC members voted for a cut in policy rates. Going forward, as more MPC members become confident of achieving the inflation target of MPC, we should see MPC change its policy stance and cut policy rates.

For salaried investors how should one be looking at the Budget – is there any tweaks required for an MF portfolio?
Sachin Bajaj: No changes in the tax structure were made. We will wait for the final budget in July’24 to see if any changes are proposed in the final budget.

Although the Budget highlighted continuity of policies and more outlay – are there red flags that you saw in the Budget?
Sachin Bajaj: No red flags per se in the budget. The continuity of policies is the biggest positive. Capex growth is lower than in earlier years. So, if private capex does not pick up, then some concerns might emerge about overall capex. But it is too early to highlight that as a red flag.

What is your take on the rising interest of the govt on renewable or green energy? Will this space produce maximum multi-baggers in the near future?
Sachin Bajaj: Renewal and green energy investment are two focus areas of the government. The share of renewal in the overall energy pie is only going to increase going forward, not only in India but across the world.

It is therefore encouraging to see the government taking a proactive interest. Large-scale investment and support by the government will bring down the overall cost of the entire value chain and help increase the adoption rate among end users, which will ultimately help the private sector players put in risk capital and scale up.

This space will see many companies getting listed over the next decade and will create shareholders’ wealth in the process.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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