Credit needs to flow for corporate profits to glow on FPI radars: Raamdeo Agrawal
economic growth) translating to the micro (corporate profit growth). On the macro, the finance minister has just delivered a bullish budget. And yet, the million-dollar micro question remains — will corporate profits revive?
First, the budget. It can be dissected into three C's — consolidation, consumption, and capex. On the consolidation front, the budget is firmly on track, with FY25 fiscal deficit at 4.8% of gross domestic product (GDP), expected to be further lower at 4.4% in FY26.
Clearly, consumption is the biggest highlight of the budget, with zero tax up to income of ₹12 lakh, up from ₹7 lakh. Besides this, there are a slew of measures for the bottom of the pyramid, including farmers, youth, gig workers and micro, small & medium enterprises (MSMEs). All of this will combine to boost consumption and inch up economic growth.
On capex, the FY25 figure of ₹10 lakh crore is lower than the budget estimate of ₹11 lakh crore. Further for FY26, capex is estimated at ₹11 lakh crore, broadly in line with GDP growth.
The government could have done somewhat better here, for instance, by way of higher proceeds from PSU divestment, especially given a highly buoyant market.
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