Finance Minister Nirmala Sitharaman in her Budget speech on February 1 focused on three key schemes - infrastructure, disinvestment and capitalisation. These are exactly the areas the government should be focused on so it will, as always, come down to execution.
It is important to watch how the government executes its Development Finance Institutions (DFIs), Production Linked Incentive (PLI) scheme expansion, asset reconstruction company, PSU recapitalisation. Similarly, it is heartening to hear of the government's intention to 'minimum government, maximum governance'.
The overhaul of redundant customs duty structure, GST simplification, higher FDI in insurance, stronger NCLT, single Securities Markets Code and making tax assessments easier are all encouraging signs.
Further, it has committed a larger outlay (albeit still only 2.5 percent of GDP terms) on infrastructure spending across rail and rural. We hope this will get employment back up as the country looks to fill the hole in the economy left behind by COVID.
Disinvesting/privatising PSUs and insurance companies is the correct move. While the intention to privatise and disinvest has been there nearly in every Budget, given the difficulty the government has had with this target in the past, we remain cautious on how the Centre will balance its books and manage the committed deficit.
One area we wish the speech had paid more attention to is the government's artificial intelligence/machine learning (AI/ML) strategy. Given the strategic significance of cutting-edge technology in the coming decade, it would have been good to encourage innovation via a scheme, sandboxes, etc. in the Budget speech.
The devil remains in the details, but we are happy with the direction in which the government intends to move with this Budget.
(The author is co-founder and Chief Investment Officer at Upside AI)