Veteran fund manager Nilesh Shah tells this one thing from the budget that will boost economy

There is a need in the budget to support consumption, especially at the bottom end of the pyramid.

Nilesh Shah was a CIO of Franklin Templeton and ICICI Prudential AMC, then MD and CEO of Axis Capital. Currently, he is the MD of Kotak Mahindra Asset Management company. In the recent interview with ET, he told discussed one thing that is still in the pre-pandemic levels, which is the biggest concern to the economy.

From a market point of view, today our trade, agriculture, private investment and government spending are above the pre-pandemic level but the biggest driver for our economic consumption is below the pre-pandemic level. Clearly, there is a need in the budget to support consumption, especially at the bottom end of the pyramid. We have seen what wonders MNREGA has created in the rural economy. Can we think of launching an urban MNREGA solution targeted especially towards those at the bottom of the pyramid and who have been impacted adversely by the pandemic?

How can the Budget push consumption to next level?

We have been providing food grains to 80 crore families. If we can create an urban MNREGA scheme that is targeted towards school bus operators, for people in the film and entertainment industry and employees in the restaurant and hotel industry, this will support consumption and give breathing space to these people and they will be able to get adjusted into the mainstream economy.

So one is using surplus labour to build urban infrastructure like we are doing in rural infrastructure. This will support consumption. The second thing is to encourage industry so that we can create a virtuous cycle. Textiles, automobiles, housing and construction are three large industries that employ a lot of people.

In the case of automobiles, there are limitations in terms of giving incentives because of raw material shortages. Housing and construction have the least import dependency and hence if we encourage housing, then it will start creating a virtuous cycle where there will be more demand for houses. They will employ more people and they will go and spend money on consumption. So either we give money to the bottom of the pyramid or we encourage industry which employs people from the bottom of the pyramid. That combo will create a solution for consumption and take it above the pre-pandemic level.