Budget 2023: It’s a Bahubali budget; FM shot multiple objectives with one arrow, says Nilesh Shah, Kotak AMC
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Synopsis
“Credible numbers are giving confidence that the Budget presented by the FM is reliable, steady & growth-oriented. The estimates are fairly conservative. 6.5% real GDP growth, some amount of inflation and tax buoyancy, 11-11.5% revenue estimates looks fairly conservative just like last year. The divestment targets which are set, can easily be achieved.”
Our markets were already expecting a fantastic Budget from the finance minister. There were expectations built into the market and hence markets are not going to respond in a hurry. This is like a Bahubali budget – with one arrow, the finance minister has shot multiple targets. There is a path of fiscal prudence with a lower deficit this year and a target of 4.5% for FY26.
There is growth multiplier through enhanced allocation to infrastructure investments. In fact, it is higher than what was expected by the Street. There is small support to consumption through tax cuts and more importantly, there are several steps to revive private sector investment.
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How are things moving as far as the overall fiscal consolidation is concerned? The numbers are much more realistic in terms of growth. Can you talk to us about the quality of the Budget?
The most important thing is the credibility of the Budget. All the off-budget items to a great extent has been accommodated into the Budget. Second thing, the estimates are fairly conservative. 6.5% real GDP growth, some amount of inflation and tax buoyancy, 11-11.5% revenue estimates looks fairly conservative just like last year. The divestment targets which are set, can easily be achieved in a market like this and there is proposal of a strategic divestment of IDBI Bank.
If the revenue numbers are looking reasonable, so are the expenditure numbers. Despite an increase in infrastructure investment by almost Rs 3 lakh crore, the overall numbers have remained static on the non-infrastructure spending and that is primarily driven by reduction in the subsidy burden.
Subsidy drops from about Rs 5.6 lakh crore to Rs 4 lakh crore. The credibility of numbers gives confidence that the Budget is reliable, steady and growth-oriented. It achieves multiple objects at the same time.