CAPITAL EXPENDITURE

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• Divestment not a tool for fiscal consolidation, says Finance Secretary TV Somanathan

  The government is confident of meeting the targets in the interim budget presented on Thursday. Finance Secretary TV Somanathan stated that the government capital expenditure continues to be high and expressed confidence in achieving the 5.1% fiscal deficit target in 2024-2025, with estimated revenue growth of 11.5% against GDP growth of 10.5%. The nature of public expenditure is unpredictable, but barring unforeseen events, the aggregate public expenditure is projected to remain unchanged, he added.

  

• Budget shows a path for Viksit Bharat

  FM Sitharaman, in her Budget speech, presented a solid vision for a developed nation. The government thinks that the next five years will be years of unprecedented development and the golden moments to realise the dream of developed India @2047. The trinity of demography, democracy and diversity will play a pivotal role.

  

• Union Budget 2024: Why Sitharaman has given more to India than to Indians?

  FM Sitharaman's interim budget takes a conservative approach, focusing on fiscal prudence rather than pre-election giveaways. With a slower pace of capital expenditure and reduced welfare spending, Sitharaman aims to improve India's fiscal deficit. The budget also prioritizes private sector investment and assumes higher GDP growth. While Indians may not see immediate direct benefits, the long-term benefits for India are significant.

  

• Budget 2024: Govt prioritised fiscal prudence over populist spending, say Economists

  According to leading economists, the Interim Budget for 2024 prioritised pragmatism over populism by focusing on higher capex disbursements and faster fiscal consolidation. The fiscal target for 2024-25 translates into a lower gross market borrowing figure than expected and is likely to be positive for the bond market, they added. Read here:

  

• FM raises capex expenditure by 11.1% to Rs 11.1 crore

  Brokerages had predicted that there would be be a slowdown in capital expenditure growth with focus shifting towards alleviating rural stress

  

• Green energy transition in developing nations: High interest rates in developed nation could disrupt the transition

  The clean energy transition is heavily dependent on the installation of new infrastructure and, therefore, highly susceptible to interest rates, affecting not just RE but also other critical sectors like electric vehicles (EVs), green hydrogen (GH2), and allied industries. All these technologies heavily rely on low-cost capital to compete with fossil-fuel-intensive energy systems and make them affordable to scale up their adoption.

  

• India Inc's capex cycle may move into top gear

  The capex tracker index of institutional research firm Avendus Spark shows a reading of 342 in June 2023 - the highest in more than 12 years. The index has been consistently rising since December 2020 - when it hit a low of 147. The index assigns weights to private capex announcement (35%), aggregate new order (15%), import of capital goods (10%), and central government capex and state capex (20% each).

  

• Record fresh capital raised via IPOs this year points to capex revival

  About half the initial public offerings proceeds of ₹27,435 crore garnered or announced in 2023 are fresh issues, meaning the funds will go into the capital structure of the issuers to either finance capital assets or retire existing debt earlier garnered to build capacities.

  

• Axis Bank sees some stress in personal loans: Macquarie report

  Macquarie believes that with Axis Bank acquiring a significant stake in Max Life Insurance, there could be more involvement at the board level by the bank. Axis Bank has increased its stake in Max Life Insurance to 19% from 13% last month.

  

• Centre and states likely to meet fiscal deficits target in FY23 on strong revenue growth

  The central government is on track to maintain the targeted fiscal deficit of 6.4% for FY23 despite an increase in capex. It is estimated that States will see a decline in fiscal deficit owing to robust growth, which will outpace expenditure.

  

• Why it’s time for private capex to come back

  Record levels of order flows have been witnessed for all major infrastructure players with the govt’s increasing focus on Gati Shakti scheme and National Infrastructure Pipeline (NIP)