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The Budget 2023 received positive response from the mutual funds industry.
While the biggest highlight was higher capex spending target, no announcement on capital gains exemption was a setback.
Overall, budget 2023 will support economic growth, believe MF officials. Let’s look at what MF officials have to say:
MF CEOs
DP Singh Deputy MD & CBO, SBI MF
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.
Jimeet Modi, Founder & CEO, SAMCO Group
What is bad for the insurance industry in the budget presented today by the finance minister (FM) Nirmala Sitharaman, will actually act as a blessing in disguise for the mutual fund (MF) industry. A lot of mis-selling was happening in the insurance industry where investors were sold a packaged investment cum insurance product as endowment scheme or some other schemes, where premium outlay for investors in a financial year used to be Rs.5 lakh and above. So, they were actually sold some investment product with some insurance part in it. So, this will be the indirect implied benefit, so what is bad for the insurance sector could result in being better for the MF sector.
Navneet Munot - MD & CEO, HDFC MF
Continued focus on capex, job creation and special mention of financial sector reforms are encouraging. Now with the event behind us, markets’ focus shifts back to global cues, monetary policy and incoming data points.
Nilesh Shah, Managing Director, Kotak Mahindra MF
This budget is a Bahubali budget. With one arrow multiple targets are shot. Fiscal prudence is achieved with lower deficit and path set till FY 26. Consumption is supported through tax cuts. Investment outlay is enhanced. Realistic numbers will enhance the credibility.
NS Venkatesh, CEO, AMFI
A one-stop KYC system through the Digi-locker will help reduce the efforts that investors have to put while investing in various financial assets.
Also, the inclusion of financial literacy books in the libraries run by National Book Trust, Children’s Book Trust and others will go a long way in inculcating a culture of financial savings in the younger citizens of the country.
Vishal Kapoor, CEO, IDFC AMC
The Union Budget FY24 offers stability for markets by not making any significant changes in the structure of capital gains taxes. Additionally, the budget has provided significant direct tax benefits to individuals which will help increase disposable income and support consumption spending.
Fund managers - Equity
George Thomas, Fund Manager- Equity, Quantum MF
Budget lacked any major direct measures to stimulate consumption and rural economy. Absence of any changes in capital gains tax rate is a relief. Overall, the fiscal consolidation pathway and robust infra spends would support the broader economic growth in the medium term.
Mahesh Patil, CIO, Aditya Birla Sun Life MF
The proposed capital expenditure at Rs 10 lakh crore is a record high. In addition, there were no negative surprises on the capital gains front. In fact, there was some relief for taxpayers which should support consumption. Overall, the budget is pro-investment and consumption.
Manish Gunwani, Head – Equity, IDFC MF
The FY24 budget has several significant benefits for the economy, including a robust increase in capital expenditures that emphasizes key sectors such as railway infrastructure and housing development. Additionally, the budget has conservative revenue projections and focuses on improving macroeconomic stability by reducing the fiscal deficit and providing tax relief, which will encourage consumer spending and further drive economic growth.
Rahul Singh, CIO-Equities, Tata MF
Budget is pro-growth with focus both on investment and consumption. This will be important driver of broad-based GDP growth in FY24E, critical to maintain the fiscal roadmap outlined by the government. Tax changes on some savings products in insurance is a negative for the insurance sector.
Srinivas Rao Ravuri, CIO, PGIM India MF
Government seems to be targeting inclusive growth with a focus on lower and middle class, spurring domestic manufacturing and infrastructure development. We reckon this is a growth-oriented budget hinging on pragmatism.
Fund managers - Debt
Deepak Agrawal, CIO-Debt, Kotak Mahindra MF
Investment in capital expenditure would result in boosting productivity over medium term and help in bringing down inflation structurally. The budget 2023 nominal GDP growth rate and revenue growth estimates are credible.
Murthy Nagarajan, Head-Fixed Income, Tata MF
RBI is expected to move towards neutral stance in the coming MPC meeting as both CPI inflation trajectory and borrowing programme are within manageable limits. RBI is now expected to focus on supporting GDP growth to 6.5% in the next financial year as global economy is not expected to be supportive.
Pankaj Pathak, Fund Manager- Fixed Income, Quantum MF
From bond market’s perspective, reduction of fiscal deficit to 5.9% of GDP and lower than expected market borrowing of Rs. 15.4 trillion were somewhat positive. Government reiterated its commitment to further consolidating its fiscal deficit to below 4.5% of GDP by FY 2025-26. This should help investor sentiment in the bond market. We expect the government bond yields to remain around current levels or decline marginally over the coming months
Puneet Pal, Head – Fixed Income, PGIM India MF
The fiscal deficit and the borrowing numbers in the budget are as per expectations and yields are down by 6-10 bps across the curve with a steepening bias. We think it is more of a relief rally in the bond market in the absence of any negative surprise.
