Government disinvestment plan seems to be getting aggressive and with IPO of LIC being planned, the government targets seem to become credible.
Nominal GDP target of 10% and fiscal deficit projected numbers seem to be practical.
Foreign investors may cheer incentives being provided of elimination of DDT, higher exposure FPI limit to corporate bonds, incentives to invest in Infra sector until 2024 as positive steps to encourage foreign investments in India.
For domestic income tax assesses, expectations on dividend distribution tax, timing benefit of tax on ESOPs for start-up company employees, Income tax rate reduction for income up to Rs 15 lakhs have been met. IT assesses who were involved in financial savings for taking advantage of exemptions does not gain much. Relief will clearly be felt by employees who are earning below Rs 15 lakhs and not saving for taking advantage of exemptions, which will spur consumption demand due higher disposable income. Higher income earners clearly will continue to shoulder the financial burden. No relief on long term capital tax gains was a disappointment from investment perspective.
Overall, while the markets may give thumbs down since the Government has missed an opportunity to provide a near term impetus to economic revival, no major negative surprises from the Union Budget will go down well in the stock markets in the medium term.
Shashank Khade, Co-Founder & Director, Entrust Family Office