Capex proposals can be inflationary; equity, bond markets may not like it

The best part of the budget proposals has been the continuity in managing the fiscal situation and focus on capex spending without any negative surprises, says Andrew Holland.

On the positive side, the one overriding factor is that the Budget 2022 is a continuation of what the Finance Minister did last year in terms of capex. That apart, there are no real surprises as regards rejigging tax slabs or anything that can upset the stock market. The government is trying to achieve bigger goals over the years. As expected, there has been a focus on roads, railways, infrastructure and new-age Industries.

On the negative side, the huge capex proposals can be inflationary in the short-term, which the equity and bond markets may not like. Indeed, bond yields