The interim budget was predictable. There was something for everybody who is a part of a significant voting bloc. Aside from letting the government run without interruption, the only other purpose of interim budgets is to manufacture electoral narratives. The onus of extending the ideas from an interim budget solely depends on the newly elected government, its mandate, composition, and leadership. The current government has put forward its clear intent and stated explicitly what voters can expect from it if re-elected.


The decisive shift to targeting subsidies is clearly the most significant development in this interim budget. Progressively, we should see this shift gain momentum and intermediaries will be removed from the process of delivery of benefits. Money will flow directly from the government to the beneficiaries. The strong rural oriented economic push initiated by the previous government is being taken to a different level altogether by the incumbent government. Yet, we see rural distress.


Clearly, we are moving towards trying a different economic model from what we did in the past two decades. We need to quickly fix the problems of rural India and a quick-fix solution may not be enough. Over the next two years, we should see the robust revival in the economy aid strong growth in GST revenues. This will be reflected in the direct tax growth as well. Formalization of the economy will move to the next stage. These three developments will help the government find the resources needed to fix the problems of rural India.


The next six months will see the usual volatility that markets demonstrate during elections. But the subsequent phase promises to be a great phase for India. Investing during the phase of volatility is not going to be easy. But wealth was never created doing easy things. Only the conviction shown when others are fearful made even the most prolific investors wealthy. Remembering that and reflecting that in our investment actions will take our investing to a higher plane.


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