Navneet Munot, ED & CIO, SBI Mutual Fund
In the absence of a significant growth boost in the budget and given the cautious global environment owing to the spread of coronavirus, market should stay volatile in the near-term.
More could have done for the real estate sector beyond extending the window of tax exemptions by a year given its multiplier impact on the economy.
Overall, the government appears to have chosen to consolidate on the reforms of the past few years. The budget continued with the thrust on infrastructure, social welfare, and improvement in ease of living, simplification on taxes and leveraging technology for better governance. Full tax exemption to sovereign wealth funds for investments in infrastructure and other notified sectors is a significant positive. It was also heartening to see the focus on sustainability through measures on environment and climate change.
Srinivas Rao Ravuri, CIO PGIM India MF
Key positives are tax exemptions given to sovereign funds to invest in India extending concessional corporate tax of 15% to power sector and removal of dividend distribution tax.
Key disappointments include absence of any concrete measures to accelerate spending on core sectors such as infrastructure.
Chandresh Nigam, MD and CEO, Axis MF
The budget did not deliver on key market asks for equity markets around reduction in LTCG rates or groundbreaking growth stimulus. However, the government also maintained fiscal prudence by refraining from increasing borrowing limits for the current year and marginally increasing borrowing targets for the next year in line with market expectations.
On the debt side, the fiscal stance is on expected lines. It will provide a source of relief to the markets. Further expansion of corporate bond limits for foreign investors is also likely to be seen as positive as deeper corporate bond markets will improve market efficiency and transmission of rates.
With the abolishing of DDT, dividends on equity mutual funds will revert to the slab rate taxation of old. Given this change, investors looking for regular income from their equity investments should look at systematic withdrawal plans from a tax efficiency perspective. Growth option plans continue to offer the best long term investment option for investors looking to participate in the equity story as the incidence of taxation comes about only once at the point of sale.
Nilesh Shah, MD & CEO, Kotak Mahindra AMC
The budget is good on intent. However, the key is efficient execution in a time-bound manner. There are many positives to simplify things and encourage entrepreneurs but again, key will be execution in a time-bound manner. Intent needs to be converted into implementation.
N S Venkatesh, Chief Executive, AMFI
Budget proposals now encourage retail investors, more prominently than ever, to align with goal-based mutual fund investments. This is what AMFI has been professing and i am confident that mutual fund investment avenue as a long term wealth creation tool would stay intact and will continue to remain a priority for retail investors.
Amandeep Chopra, Group President and Head of Fixed Income, UTI AMC
The bond markets had factored in a slippage in fiscal deficit and the numbers are in line with the market expectations.
The overall revenue estimates do not seem to be aggressive given the expectation of a 10% nominal GDP growth. However, the reliance on higher non-tax revenue, which have a weak track record is something to watch for. The increased reliance on small savings (at an all-time high) to manage the capital receipts in the current and coming year is a concern.
We think the budget has not provided any specific reason for RBI to change its present focus on inflation. Hence, there is limited space for any easing on the rates from RBI in the coming policy.
In our view, investors will gain from an overall asset allocation in favour of short-term funds in their fixed income portfolios.
Nilesh Shetty, Associate Fund Manager, Quantum Mutual Fund
None of the Budget proposals give a major fillip to consumption demand. Nor do they address major problems faced by select sectors like real estate, power, and credit availability for below investment grade borrowers.
It will be up to the natural business cycle to revive corporate earnings, which could be a gradual process.
Suyash Choudhary, Head – Fixed Income, IDFC AMC
No extra borrowing for the current year is an unequivocal positive surprise for the market.
The government has furthered the opening up of local bond market to offshore investors. The finance minister hiked participating limit for foreign portfolio investors (FPIs) in corporate bonds from 9% of outstanding currently to 15%.
Moreover, certain specified categories of government securities would open for non-resident investors, apart from being available to domestic investors as well.
It may be argued that overall interest in Indian bonds is anyway muted for now and hence these expansions may amount to little in the near term. The other view to take could be that incremental ease of operation does bring in more flow and that especially the measure on government bonds could be in the direction of ultimate inclusion in global bond indices.
Krishna Karwa, Senior Research Analyst, iFAST Financial India Pvt Ltd
Overall, the budget fails to meet expectations in the backdrop of weakening macroeconomic conditions. There seems to be no meaningful stimulus to private sector infrastructure, manufacturing, real estate and rural spending. Issues pertaining to unemployment and weakness in the financial system have not been addressed satisfactorily either.
Revision of tax slabs was an eagerly anticipated positive, but the rider of foregoing exemptions and deductions has offset it. Nevertheless, individuals have the option to continue with the prevalent tax structure. Lack of relief in long-term capital gains tax and taxability of dividend distribution tax in the hands of recipients may disappoint retail investors.
Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services
The option to individuals to opt for a lower tax slab structure with no deductions or to continue with the earlier higher slabs with deductions for home loan EMIs , investments in insurance etc seems slightly confusing. For a country like India, which has a young population with poor social security, it is imperative to incentivise young India to save for the future and own a house as well.
Mukesh Kalra, Founder & CEO, ETMONEY
The proposal to introduce new tax regime is a great step towards giving equal chance to every Indian in lower income segment to maximize their post-tax incomes.
In the old regime, an individual supporting a larger family and negligible savings was forced to pay higher tax compared to an individual supporting a smaller family or one with no dependents. This created disparity when it came to effective taxation for the former group. In the new regime, the disparity ends and also frees up income in hands of individuals to give a boost to consumption.
