scorecardresearchBudget 2023: What does this budget have for retail and young investors?

Budget 2023: What does this budget have for retail and young investors? 10 experts share their views

Updated: 01 Feb 2023, 03:04 PM IST

  • According to analysts, the market the budget seems to have received favourable feedback from the market. “We have already managed to reclaim the 17800 mark, which was compromised last Friday. Now today’s close would be quite crucial. If Nifty, manages to stay above 18,000 mark, we should brace ourselves for a strong rally in the coming days,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd.

India's Finance Minister Nirmala Sitharaman presents Union Budget 2023-2024 (April-March)

India's Finance Minister Nirmala Sitharaman presents Union Budget 2023-2024 (April-March)

Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in the Parliament on Wednesday, February 1. This was the last full budget of the Modi government before the general elections in 2024.

One of the key highlight from the budget was increase in FY24 capital investment outlay by 33% to 10 lac crores, which would be 3.3% of gross domestic product (GDP).

Following the budget speech 2023 by Sitharaman, the markets cheered the union budget and rose around 2%, initially.

According to analysts, the market the budget seems to have received favourable feedback from the market. “We have already managed to reclaim the 17800 mark, which was compromised last Friday. Now today’s close would be quite crucial. If Nifty, manages to stay above 18,000 mark, we should brace ourselves for a strong rally in the coming days,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd.

Let's take a look at some experts views on the 2023-2024 (April-March) Union Budget.

Shishir Baijal, Chairman and Managing Director, Knight Frank India

“The union budget presented today by the honourable Finance Minister is growth oriented and with a long- term view of social and infrastructure development. The budget is cognizant of the need to empower the different segments of the economy and the society. In doing so, the allocations for the various infrastructure developments are very critical. The massive 33% increase to 10 lakh crore outlay toward infrastructure investment and the 66% increase in the outlay toward affordable housing via the PMAY shows that the budget has planted its foot firmly forward on the growth agenda. This has been attended while providing a fiscal consolidation road map which would cheer the financial markets too.”

B Gopkumar, MD & CEO, Axis Securities

“An extremely well-balanced budget focused on growth driven by capital expenditure while giving an adequate push to rural welfare and agriculture. Government borrowing is well-calibrated, and it is a significant positive. The fiscal deficit target of 5.9% indicates a considerable degree of prudence. On top of this, relief to the middle class on the income tax front is the cherry on the cake. At this point, it is difficult to find any shortcomings. The budget has delivered on all the expectations very well. In the short term, we expect the markets to move higher on the back of pro-growth measures announced in the budget and less fear of the government crowding out private investments due to fiscal prudence shown by the government.”

D. P. Singh Deputy Managing Director & Chief Business Officer , SBI MF

"The Union Budget for 2023-24 has persisted on the responsible and progressive path adopted in the last few Budgets. The focus on infrastructure was expected, but the quantum of allocation for capital expenditure has come as a reassuring and positive surprise. Moreover, the relief in personal income taxes across all levels of taxpayers is likely to act as a sentiment- and consumption-booster for the economy. The budget speech also laid the required emphasis on the financial sector and its contribution to nation building. These measures will positively influence the behavior of investors.

Important capacity-building initiatives ranging from financial inclusion to artificial intelligence are long-term positives for the economy. All of this has been done without any compromise on fiscal prudence. Such a balancing act is praiseworthy."

Namrata Mittal, CFA & Senior Economist, SBI MF

“Union Budget 2023 has built on the foundation laid in the prior budget- fiscal prudence without compromising growth. Fiscal deficit is expected to consolidate by 50bps to 5.9% in FY24 with a vision to consolidate to 4.5% by FY26. The quality of expenditure has improved with capex to GDP rising to 3.3% of GDP (vs. sub 2% pre-COVID). Massive increase in capex outlay alongside reduced tax liability on personal income tax is a twin approach to boost both infrastructure and consumption spending. Nominal growth expectations look tad optimistic, thereby laying a slight bit of manageable optimism to receipts. Long term capital gains tax has been left untouched allaying the fears of the equity market. Inclusiveness has been catered to without losing an eye on transition to a green economy. The gross borrowing number budgeted for FY24 is pegged at 15.4 trillion, which is marginally better than street expectations. Prima-facie, the 2023 budget should be cheered by the equity and fixed income markets alike.”

Govind Singh - MD & CEO of Utkarsh Small Finance Bank

“In the background of India being considered as one of the largest growing economies in the coming financial year, the budget has laid down an all round emphasis on inward thrust.

Focus on capital expenditure, schemes on social and economic upliftment under the narrative on Atmanirbhar Bharat and Saab Ka Saath Saab ka Vikas are major initiatives.

Budget 2023 lays down prescription on inclusive development, mechanism for benefits to reach the last mile, infrastructure growth, green growth and vibrant financial sector. The government has also indicated its willingness to relook at various regulations including BR Act.

Further lowering of income tax rates gives greater power to spend or save in the hands of the common man.

In addition, fresh allocation to credit guarantee scheme for MSMEs and push on digital architecture will augur well for access and affordability of funds for small and medium income profile borrowers to continue building their vocation.”

Madhavi Arora, Lead Economist - Emkay Global Financial Services

“The budget has ensured, the fiscal impulse is maximized to improve potential growth, while signalling adherence to medium-term fiscal sustainability. This requires continued financial sector reforms, better resource allocation. Expenditure focus has been on rural, welfare, infrastructure, PLIs, and energy transition. Capex spend has picked up significantly to 3.3% of GDP and is almost double of Pre-Pandemic prints. This especially implies larger fiscal multiplier on employment and growth and will support crowding in of still-lacking private capital expenditure (capex).

The tax benefits have been tweaked to encourage individuals to move towards new tax regime, and to provide relief to middle class, while maximum marginal rate has also been reduced to 39% from 42.7% to give relief to the highest income strata. While the government is foregoing effective revenue of Rs350bn, this could have a consumption multiplier effect albeit at the margin, in the economy that’s seeing fading consumption growth.”

CA Rakeshh Mehta, Chairman Mehta Group - Mehta Equities

Keeping India first and citizen first, a well-presented budget towards growth and focus to build the Indian economy stronger. At a macro level, raise in capital investment outlay by 33% to 10 lakh crore -- 3.3 per cent of the GDP, would propel the economy towards a high growth rate, which is the need of the nation. From the individual’s perspective, Huge Income Tax Relief with hike is tax slab structure would bring money in the hands of the tax-payers and could have helped drive consumption growth over the long term.”

Umesh Kumar Mehta, CIO, SAMCO MF

The budget when dissected in three realms of Agriculture, Manufacturing and Services sector, it can be seen that it has done maximum for Agriculture and least for Services sector and specially for financial sector; as the budget's inclination towards New Income Tax regime will reduce incentive to invest in financial products (including MFs’ ELSS, insurance premium etc) or for that matter even the decade old housing sector incentives for interest payments will be the least preferred option. This budget therefore has rewritten the rules for financilization of savings in India which will induce expenditures rather incentivize savings. However the fiscal deficit under control, no big disinvestment targets, no bigger borrowings and thrust on govt capex will keep the bulls happy on the stock markets.”

Shamsher Dewan, Senior Vice President & Group Head - Corporate Ratings, ICRA Ltd

"Multiple proposals in the Union Budget are seen favourable for the automotive sector. A sharp 33% increase in capital investment outlay, identification of critical transport projects for first and last mile connectivity, and relaxation in personal tax rates shall aid the demand for the auto sector. Thrust on green energy continues with specific budgetary allocation for old vehicle scrappage, energy transition, and viability gap funding for battery storage solutions with 4000 MWh. Customs duty exemption on the import of capital assets for manufacturing lithium-ion cells for batteries used in electric vehicles shall facilitate EV ecosystem development and aid faster penetration. An increase in the duty rates on compounded rubber from 10% to Rs. 25 (or) 30 per kg, whichever is less, is a challenge for tyre industry, which significantly depends on imported rubber."

Dinanath Dubhashi, MD & CEO, L&T Finance Holdings Ltd

"It's a well-balanced Budget that has finely pushed the capex spending without compromising the fiscal discipline. The measures oriented towards improving the purchasing power of households and enhancing the prosperity of agriculture and allied sectors augur well for the business models of retail-focused NBFCs. A good control over market borrowings has avoided any negative news for the bond markets. In the absence of any significant global shock, today's Budget has every potential to bring out a broad-based revival in the Indian economy".

First Published: 01 Feb 2023, 03:03 PM IST