“The expectations of the budget to start with were low. Already some of the big reforms had been executed by the government and to expect another set of reforms or big bang announcements would have been a bit unfair,” Chaudhry said. He added that maintaining fiscal prudence and policy stability was a key positive. “The fact that they have maintained fiscal prudence, the fact that they have continued in the direction of ensuring that there is stability in policies is a very important statement in the budget.”
Chaudhry highlighted several focus areas, including pharmaceuticals, semiconductors, container manufacturing, MSME schemes, dedicated freight and railway corridors, and infrastructure in tier II and tier III cities. He also pointed to measures aimed at deepening corporate bond markets and enabling municipalities to issue bonds.
“Their whole focus seems to be keeping Atmanirbharta as the lodestar of the Budget,” he said, adding that while there are positives, markets are reacting to headline concerns. “The market is spooked a little bit because of the higher borrowings. Market is spooked because they have increased the STT rates. There were people who were expecting some concessions for the foreign investors in the sense of capital gains taxes, that has not come through.”
According to Chaudhry, as investors go through the finer details, sentiment could stabilise. “When they go through the details, they will realise that we need to get back to business. There are a lot of positives also in the budget. While people are seeing the negatives, hopefully they will start seeing some of the positives and the market will settle.”
Banking Committee and Mega BanksOn the proposal to set up a high-level committee on banking to align the sector with India’s next growth phase, Chaudhry said it was premature to react without clarity on the committee’s scope and composition. However, he welcomed the intent.“The fact that the government believes that something of this nature is required is itself a positive step,” he said, noting that financial inclusion and customer protection are expected to be key pillars alongside the future of banking.He also flagged structural changes in the banking ecosystem. “The nature of the banking industry is changing… the kind of deposits which the banks are getting, where are the deposits coming from, all that has undergone a meaningful change over the last couple of years.” He added that there could be discussions around FDI and the role of global banks.
Emphasising the need for scale, Chaudhry said, “If India wants to be and will be one of the largest economies in the world, India does need very large banks, and so whatever that can be done to push that agenda always will be welcome.”
Consolidation, NBFC RestructuringOn policy measures related to financial services, including the restructuring of public sector NBFCs like PFC and REC, Chaudhry said the government’s direction was consistent with its broader push for scale.
“The government has hinted that they would like the banks to become bigger, so they can be more meaningful in the marketplace and that process will continue,” he said. He added that larger institutions are better positioned to meet the growing needs of the economy. “You do need institutions with much larger balance sheets to be able to have that impact and difference which is needed for an economy of our size and the projections we have and the aspirations we have.”
He also said the fiscal assumptions appeared credible and noted potential flexibility from RBI dividends. “The fiscal assumptions, like some of the previous years, look reasonable and credible. And there is some flexibility available in terms of what comes in the form of RBI dividend.”
Axis Bank’s ROA AspirationAsked about Axis Bank’s return on assets (ROA) target of 1.8% amid a subdued market reaction, Chaudhry reiterated that it remains a long-term aspiration.
“As a management team, as an institution, our aim is to get to 1.8 ROA and that aspiration does not change. Obviously, the macroeconomic situation changes, the geopolitical situation changes, but we have to keep executing on our aspiration and I am very confident that as we keep plugging away we will get there over a period of time.”
When pressed on timelines, he added with a smile, “We will keep trying.”
Overall, Chaudhry described the budget as a “mixed bag,” but one that stays the course on fiscal credibility, institutional scale, and long-term self-reliance — even as markets digest near-term pressures.
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