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Business News/ Mutual Funds / Budget 2024: Mutual fund players call it prudent and not populist
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Budget 2024: Mutual fund players call it prudent and not populist

Union Finance Minister Nirmala Sitharaman laid emphasis on fiscal responsibility, thus giving boost to the debt market, maintained her stance on infra development, inclusive development, green ecosystem and research & innovation.

Mutual fund give a thumbs up government’s focus on fiscal consolidation Premium
Mutual fund give a thumbs up government’s focus on fiscal consolidation

Union Finance Minister Nirmala Sitharaman on Thursday presented the interim Budget 2024 and put all of taxpayers’ expectations to rest by not announcing any major reform or change in the tax rate.

She laid emphasis on fiscal responsibility, thus giving a boost to the debt market, and continued her stance on infra development, inclusive development, green ecosystem and research & innovation. 

Spokespersons of some mutual fund houses believe that it was a prudent, and not populist, budget. 

Chirag Mehta, CIO, Quantum AMC says, “It’s a prudent, not populist budget. There was an expectation that given it’s an election year, the budget could tilt more populist with more support for the rural sector. However, contrary to expectations, the government continues to be driven by development and fiscal prudence as the central focus.  Given the economic growth momentum , there was a need for assuring macroeconomic stability which has been judiciously crafted to give way for fiscal consolidation. The lower tax collection assumption could either be conservative or a government signal to assume some growth moderation going forward."

Ashish Gupta, CIO, Axis AMC, says, “While we did not expect any major announcements in this budget, the lower fiscal deficit coupled with higher capex outlay will aid continued momentum of India's growth story. Both of these moves are enablers for a pickup in the private capex cycle."

Win for debt market

Abhishek Bisen, head, fixed income, Kotak Mahindra AMC says, “Given this is an election year, the government prioritising fiscal responsibility in its interim budget is commendable. The biggest win for the debt market: the fiscal deficit of 5.1 percent of GDP for FY 24-25  was much lower than everyone expected on the street. This effectively translated into Gross Market Borrowing of 14.13 lakh crores and net borrowing of 11.75 lakh crores. Importantly, the government maintained its focus on long-term growth by allocating a record high of more than 11 lakh crore towards capital expenditure. This can be seen as disinflationary budget."

Also Read: Income Tax Budget 2024 Live Updates

Pankaj Pathak, fund manager, fixed income, Quantum AMC, concurs, “This is a very good budget for the bond market as the government chose fiscal prudence over populist spending. The budgeted fiscal deficit of 5.1% of GDP is lower than even the lowest of market estimates. Faster fiscal consolidation and consequent decline in the government’s market borrowing should drive bond yields lower and bond prices higher." 

Murthy Nagarajan, Head-Fixed Income, Tata Asset Management says, “This is an anti-inflationary budget in an election year as the fiscal deficit is reduced from 5.8 percent to 5.1 percent. The finance ministry is clearly aiming for rating upgrade with aggressive fiscal deficit reduction target as we are at investment grade rating. The ten-year yields have come down to 7.05 to 7.08 levels from 7.15 levels. Further drop in yields is expected due to flows from foreign institutional investors and expectation of India’s rating upgrade."

However, Quantum’s Chirag Mehta believes that there was a need to support manufacturing momentum and a way to revive the rural economy. 

“Probably that could be part of the main budget that gets presented in July as government plans to showcase a pathway for Developed India," he added.

 

 

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Published: 01 Feb 2024, 03:05 PM IST
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