Infra a stronger theme post-budget: Kotak

By Nishant Kumar

MUMBAI (Reuters) - Infrastructure has emerged a stronger investment theme post-budget on plans of higher government spending and improved external funding environment, a top strategist at Kotak Group said on Tuesday.

Alroy Lobo, who oversees about $2 billion as chief strategist and global head of equities for the asset management arm of the group, said he also favoured consumption given India's demographic advantage and thrust on spending in rural areas where most of its people live, but infrastructure remained his top bet.

"Infrastructure is clearly the bet I would like to place on," Lobo told Reuters in an interview.

"If you look at the infrastructure programme, they have seen massive increase in expenditure," he said, referring to the budget unveiled on Monday.

In his budget speech, Finance Minister Pranab Mukherjee promised greater flexibility to government-run Indian Infrastructure Finance Co. to fund projects and asked state governments for speedy implementation of projects.

The budget allocated 128.87 billion rupees for urban infra, 87 percent higher than a year-ago, and provided 39.73 billion rupees for housing and basic amenities to the urban poor.

It also raised spending for national highway development programme by 23 percent over 2008/09, set aside 10 billion rupees for irrigation projects and aimed to increase investment in infrastructure to more than 9 percent of the GDP by 2014.

"Even if you assume slippages and you assume it's not 9 percent but 8 percent, the sector is going to grow at a very strong pace in excess of 20 percent," Lobo said.