I have lifted this term out of a conversation that we had on NDTV Profit today. And one can argue that it can be true.
Lower fiscal deficits, lower borrowings and lower capex outlays, er, growth, suggest playing to the gallery that loves an emerging market showing fiscal discipline. This is not only in a year where global fiscal discipline in growth-starved nations will be tested, but also in a year where other emerging markets better placed on the fiscal deficit front will compete for investments. In some ways, therefore, this budget spells out that India is growing but is also fiscally prudent and will ensure that it stays that way. It has held India in good stead in the past (remember, India did not spend its last penny away in the form of stimulus during Covid-19), and it will probably continue to hold India in good stead in the future.
The bond yield dropped promptly by nine basis points as the market understood the signalling. A probable lower cost of borrowing in a budget that is aiming to be disinflationary is something that bond markets and economy hawks would like. The currency ticked higher, and the equity markets were quiet. But I doubt that equities were too disappointed. The budget has ceased to be a big market mover. Save for three instances, Indian markets have not moved over 2% in the one week post the budget announcement.
The government's capex spending will still rise in double digits in a year where private capex is expected to pick up. Coupled with the fact that state government capex is up 40% year-on-year and is expected to continue, there should not be stress about a lack of capex growth for the economy. Yes, household capex needs to pick up, and we have seen some announcements on incentives for middle-income housing and indications of rollouts to come in the July budget. The mentions of the stress on green energy were anticipated, and additional details might get known in the quarters to come.
There were some other announcements that looked interesting too. The rooftop solar affirmation is a big step, as is the affirmation of compressed biogas. What caught my eye are the announcements around the establishment of a corpus of Rs 1 lakh crore in 50-year interest-free loans, which might help the private sector scale up research and innovation significantly in sunrise domains. A corpus of this size is expected to drive investments over a period of time in R&D, as the initial risk is borne by the government. Scaling up and further developments around this would be interesting.
This, in a nutshell, is what stood out for me: Padhaaro maare desh, says the FM.
Niraj Shah is Executive Editor at NDTV Profit.
