These steps will have a far-reaching positive impact on growth over the midterm, although some immediate expenditure on construction is also called far.
Setting up of a Separate Asset Reconstruction company for dealing with the gigantic problem of NPAs, is a step in the right direction, which will help in better recovery and prompt the banks to boost credit, which is the need of the hour.
Recapitalisation of PSBs with Rs20000 crore is also a welcome step as this will strengthen the banks to inturn raise credit creation capacity."
Divam Sharma, Co-founder, Green Portfolio, SEBI Regd. Portfolio Management services said,
"1) Setting up of Development Financial Institution for lending over 5 lakh crores over the next 3 years to Infrastructure sector is a welcome step as infra companies have been continually facing challenges in raising bank debt, high leveraged balance sheets and lesser initial interest of investors in InvITs. This will help the incumbents move hand in hand with the higher infra development targets by Government over the coming years.
2) Creation of Government entity sponsored InvIT’s for road assets, power assets, railways assets, airports, oil and gas pipeline, warehouses, sports stadiums and then monetizing them to investors will generate further interest from FPI’s and domestic institutions and will generate capital for the Government to fund the increase in Infra spending. This is a welcome move as the higher infra spend creates a high multiplier impact on the GDP and supports the Governments initiatives to “Make in India” and increasing FDI in manufacturing.
3) Fintech is an important leg for financial inclusion and has also helped India raise a high amount of FDI in recent years. Creation of Fintech hub in GIFT ISFC will help such entities step up their activity, raise more funds, and create more collaborations for growth.
4) Insurance India is one of the fastest-growing Insurance markets. Insurance tech has also generated high investor interest in recent years with companies like policy bazaar, acko, digit raising high amounts of FDI. Incremental foreign capital will enhance the penetration of Insurance in India and will also gradually help in reducing the insurance cost with higher volumes.
5) This budget is a huge positive for the markets in the long term. As also emphasized on the economic survey report, the Government has undertaken a higher fiscal deficit target of 9.5% and emphasized on infra spending, capex push, attracting foreign capital and privatization. Investors can look at pharma, agriculture, chemicals, infrastructure, insurance sectors for huge gains in the next 5 years.
6) Divesting 10-20px of LIC can generate over 1 lakh crores in itself. There is already a high interest from global Sovereign funds, pension funds and institutions for participating in the issue."