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Systematix Research Report
The headline budgeted capex numbers for FY23BE as per the Union Budget 2022 scream a substantial 35% YoY growth (over FY22BE). However, the internals matter – we have been arguing about the limited fiscal headroom for continued thrust (at least directly) on infra spending.
The budget strengthens our view of restricted infra push by the Center, even as it promises otherwise. Core infra and defence capex for FY23BE is rising only 7% over FY22RE, against an adjusted growth of 24% in FY22RE over FY21A.
Arguably, the key difference between headline and core capex numbers lies in the fact that the government has earmarked ~Rs 1 trillion towards loans to states for capex, which is a productive spend; there is also a strong boost in revenue expenditure on the Nal Se Jal scheme.
A large part of spending in the current regime is on social infra creation, which is structurally positive for the economy but doesn't benefit large infra-engineerging, procurement and construction players.
A relatively conservative budget for subsidies and growth in core revenue expenditure may pose risks to the overall fiscal deficit in FY23, though offset by moderate assumptions on revenue receipt growth.
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