A major highlight of the budget is the tax relief of up to ₹12 lakh under the new tax regime, which experts believe will boost disposable income and stimulate economic activity.
Alok Ranjan, Senior Fund Manager at ITI Mutual Fund, emphasised that the tax cuts and incentives for startups and MSMEs are designed to not only support middle-class incomes but also drive long-term, sustainable growth.
This extra disposable income, he added, will likely be channeled back into the economy, potentially boosting investments across various sectors, including mutual funds.
Speaking on the same, Feroze Azeez, Deputy CEO of Anand Rathi Wealth, explained that the tax relief will likely encourage higher spending, benefiting consumer-driven sectors like FMCG and automotive.
At the same time, the extra funds could be invested in mutual funds, particularly through systematic investment plans (SIPs).
“For those aged 25 to 40, this budget gives them the means to both consume and invest, which could drive mutual fund inflows,” he said.
As Azeez noted, nearly 25% of taxpayers are in the ₹5-12 lakh bracket, making the tax relief a game-changer for mutual fund participation.
The budget’s focus on increasing private sector investment and consumer demand aligns with the views of Sandeep Bagla, CEO of TRUST Mutual Funds.
He pointed out that the government’s efforts to empower the middle class, combined with increased disposable income, will stimulate demand for goods and services.
“The tax cuts will increase the purchasing power of consumers, which will benefit sectors like FMCG, auto, and other consumer discretionary items,” Bagla said.
However, he also expressed concerns about the moderate capital expenditure targets, which might slow immediate growth.
While the budget was largely consumption-oriented, Vinit Sambre, Head of Equities at DSP Mutual Fund, noted that it also encourages private sector investment.
By simplifying regulations and boosting initiatives like “Make in India,” the budget aims to attract private investments, ultimately benefiting consumer sectors and mutual fund portfolios.
“The focus on execution and regulatory simplification should lead to private investments, including in mutual funds,” he said.
For the bond market, Rajeev Radhakrishnan, CIO of Fixed Income at SBI Mutual Fund, acknowledged the government’s efforts in sustaining fiscal discipline but cautioned that higher borrowing numbers could pose challenges for bond yields.
An important aspect of the budget for mutual fund investors is the shift towards a more inclusive financial ecosystem.
Ajay Lakhotia, Founder & CEO of StockGro, highlighted the creation of a Centre of Excellence in AI for Education, which aims to enhance financial literacy and democratise investment knowledge.
“AI-driven tools will make market participation more intuitive, especially for younger investors,” he said.
This increased accessibility is likely to encourage broader participation in mutual funds.
Radhika Gupta, MD & CEO of Edelweiss MF, called the budget a much-needed boost for the middle class, which could drive growth and consumption.
This, she believes, will directly benefit sectors tied to consumer spending, leading to higher mutual fund inflows.
