The stock market is likely to be happy as the finance minister has stuck to the fiscal deficit number and borrowing plans. Mutual fund managers, especially debt fund managers, have been waiting for these numbers as the government has embarked on ambitious social and infrastructure spending.
“We continue on the path of fiscal consolidation, as announced in my budget speech for 2021-22, to reduce the fiscal deficit below 4.5 per cent by 2025-26. The fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP, adhering to that path,” said the finance minister. “The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and Rs 11.75 lakh crore respectively. Both will be less than that in 2023-24. Now that the private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector,” she added.
Aniruddha Naha, CIO – Alternates, PGIM India Asset Management, said, “The government has stuck to the path of fiscal prudence and it was a welcome surprise to see fiscal deficit revised estimates to be at 5.8% and a glide path towards 5.1% and 4.5% over the next two years. Also, growth in tax assumptions are below 12%, which is conservative and gives the government reasonable elbow room to continue its investment oriented growth plans.”“In an election year, the budget adeptly strikes a balance, prioritizing sensibility over populism. It showcases India’s unwavering commitment to infrastructure development, coupled with a steadfast adherence to fiscal prudence. This paves the way for sustained growth, steering the nation along the trajectory towards achieving a developed economy by 2047,” said Trideep Bhattacharya, President & Chief Investment Officer- Equities, Edelweiss Mutual Fund.Now, the important question: what should mutual fund investors do? Should they alter their investment plan because of any points in the interim budget?ETMutualFunds always tell readers that they should not change their investment plans based on market conditions or any policy announcements. Unless anything fundamentally alters the investment space, investors should desist from making any changes to their plans.As a rule, always choose debt mutual funds to take care of your short-term goals that need to be achieved in a few years. Always choose equity mutual funds to take care of your long-term plan. Note, always choose a scheme that matches your investment horizon and risk profile. If you are looking for schemes to invest, see: Best mutual funds to invest in 2024.
