FUND VIEW - India's consumption theme helped by budget: Kotak

MUMBAI (Reuters) - India's budget, which sought to put more money in the hands of individuals will make rising consumption a stronger investment theme, a top equity strategist at Kotak Group said on Tuesday.

Finance Minister Pranab Mukherjee raised tax slabs helping Indians save money, outlined his intention to cut the fiscal deficit to 4.1 percent of the GDP by 2012/13 from 6.9 percent this year, boosting shares of auto and consumer companies

"The whole focus seems to be put money into the pockets of consumers," said Alroy Lobo, who oversees $2.5 billion as chief strategist and global head of equity for the asset management arm of Kotak Group.

"I think the first half of the next fiscal year will be very very consumption lead," said Lobo, whose firm's local mutual fund unit holds shares such as Hero Honda Motors, Dabur India and Maruti Suzuki India.

The consumption story is also supported by India's rebounding economy which is expected to grow at a faster pace of 8.25-8.75 percent in 2010/11 from 7.2-7.5 percent in 2009/10.

India's target to raise 400 billion rupees through stake sales was achievable and most of it would be executed in the first half of 2010/11, said Lobo, who has tracked Indian equities for more than 15 years.

"If you have a divestment plan to raise 40,000 crore most of it will have to come in the first half of the fiscal," he said.

"It may happen with a few issuances," adding it will be a big risk to delay the stake sales to second half of 2010/11 when many economies were expected to rollback lose monetary policy.

A projected shrinkage in fiscal deficit and an accelerating economic growth favours India's plans to offload holdings.

"From a global investor perspective, I think that's what they first look at," Lobo said.

India is banking on funds raised from the auction of 3G telecom licenses, stake sales in state-run firms and the implementation of goods and services tax in April 2011 to support its planned fiscal consolidation.

The government has ambitious plans to sell stakes in 60 state-run firms over the next few years aimed at raising funds for welfare programmes without stretching an already wide fiscal shortfall.

"There are very few countries in the globe which can boast of a declining fiscal deficit trend and growing at a pace at which India is growing. I think that itself is a good enough macro reason for people to bring in money into India," Lobo said.

(Reporting by Nishant Kumar; editing by Ramya Venugopal)

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