Capital allocation is quite positive

"It is a growth-oriented budget in every sense. Not only is there a visible push on pump-priming the economy, a lot of effort has been made around creating a solid long-term growth platform. Capital allocation is quite positive with emphasis on capital spending (+35%), and a sizeable boost for both physical and social infra build in both urban and rural areas. A fillip to housing and construction in general will lead to a quicker multiplier effect on the economic activity, while incentives under the PLI scheme will also provide a runway to manufacturing investment. Managing to support it all without raising taxes and relying instead on attracting private capital in various forms is a clearly progressive. Not only will the measures announced today help banks in managing their asset quality challenges better, the ensuing growth can notably ease their burden in this regard. This positions the economy better in terms of resuming the credit cycle," said  Nitin Sharma, Director Research, Fidelity International.

The quote was originally published in in February 2021.

The opinions expressed are author's own. Fidelity International is not responsible for the author's opinions.