Government spending crucial, hope it does not pursue aggressive tightening, says Canara Robeco AMC’s equity CIO

Subscribe to enjoy similar stories. The key hope from the Union Budget is that the government does not pursue aggressive fiscal tightening, according to the head of equity investments at Canara Robeco Asset Management Co. With demand weak, private capex subdued, and household incomes seeing limited growth, the government spending remains crucial, said Shridatta Bhandwaldar, chief investment officer-equities at the company.

The previous budget marked a pivot towards consumption and revenue expenditure, and this one should avoid further tightening, he said, adding that defence capex is also expected to rise amid current geopolitical realities. Other than that, “expectations from the budget are limited," as it often excites markets but rarely delivers major changes, with taxation and strategic decisions increasingly happening outside it, said Bhandwaldar. Sector-specific tax changes, such as in life insurance, have largely been addressed, while mutual fund taxation is unlikely to be altered as past hikes—from 10% to 12.5%—have hurt sentiment without boosting revenues, according to him.

“Any tinkering usually occurs in bullish markets; divestment targets could rise to offset lower tax revenue, largely on paper." Edited excerpts: From our perspective, it’s largely a continuation. The main change is that we are now a listed entity, which adds accountability and an extra layer of regulation and scrutiny, with investors watching closely. Over the last five to six years, we’ve seen steady growth, maintained or increased market share, launched new products, and expanded our equity offerings.