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Below are Views On Budget Reaction : Sorbh Gupta, Fund Manager- Equity, Quantum Mutual Fund

The pandemic & lockdown hit Indian economy wanted a push for both capital & consumption in this budget. Through the provisions of  Union Budget 2021-22  government has targeted increased spending on infra & other capital expenditure to kick start the economy but, as  has been the cases in multiple rounds of stimulus announced last year, there is very little to boost consumption. On the contrary, the new ‘Agriculture Infrastructure  Cess’ on petrol & diesel is inflationary and has potential to reduce real income of the households thereby impacting near term consumption. This time the government has followed an fiscally expansionary path to put the economy back on track. Though, the headline budgeted fiscal deficit numbers for FY21 & FY22 looks higher due to reclassification of NSSF ( Small Savings) loans to FCI above the line. Higher borrowings ( even after adjusting for reclassification of FCI loan) by the government can crowd out the private sector demand for loans, until & unless, foreign flows in debts come to their rescue.  There have been some sector specific changes like change in FDI limit in insurance & scrappage policy for Autos which augurs well for respective sectors.  There was no significant changes on direct taxes. Overall, the government’s planned spend on infra, if executed properly,  has the potential to increase employment  & expedite ( though, boost to consumption would have expedited it much faster) the natural business cycle to revive corporate earnings which otherwise shall be a gradual process.

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