What matters is what we do and not what we think, say or plan. Having said that, here is summary of what they say they plan to do in FY-22:

The government plans to focus on growth at the cost of fiscal prudence and inflation. They plan to rely on boosting capital expenditure: A 34.46 per cent hike over 2020-21 budget estimates. They expect this to trigger a growth cycle that would generate employment and boost incomes. The stance is to not extend any income tax or other sops.

– Focus on growth: Deficit to reduce from 9.5% in FY21 to 4.5% by FY26. Deficit for FY22 estimated at 6.8%

– Prudent growth estimates: Nominal GDP Growth pegged at 14.4% in FY 22

– Prudent tax collection figures: The government has estimated a total gross tax collection of Rs  22.17 lakh crore in 2021-22, which is lower than last year’s Budget estimates of Rs 24.23 lakh crore. The government is estimated to collect Rs 19 lakh crore against its 2020-21 budget estimate of Rs 24.2 lakh crore.

– 137% increase in health spend.

– Big infra push via 34.5% higher capital budget at Rs 5.54 lakh crore; infra monetization via InVITs.

– Gross expenditure up 13% at Rs 35 lakh crore for FY21; same expenditure number for FY22. DFI @ Rs 20,000 crores

– Divestment target at Rs 1.75 lakh crore: 2 PSU banks + one general insurance company + LIC IPO + Air India + BPCL + SPV for PSU land sale.

– 7 mega textile parks to be set up over three years; FDI in insurance raised from 49% to 74%.

– Yet another power discom rescue scheme @ Rs 3 lakh crore over five years. Proposal to consolidate SEBI Act, Depositories Act, SCRA Act, Government Securities Act into one

What this means for your investments:

Equity Markets: A thumbs up from the markets for a growth focused stance. Sensex up 5%

Debt Markets: A small drop in value on your debt funds: The 10-year yield spiked to above 6% from a pre-speech 5.89%. This is due to the proposed government borrowing from the bond markets to raise money to fund their deficit. This can be eased by the RBI by liquidity infusion. We expect RBI to act to keep rates under control.