IGI Logo

"The biggest takeaway from the Budget is the pragmatic fiscal deficit target of 4.9% in FY25 and a glide path to 4.5% by FY26. The corresponding moderation in the net and gross borrowing target by the Government of Rs 14.01 trillion and Rs 11.63 trillion will be welcomed by the bond market and may also eventually bring down borrowing cost by the corporate sector. The infra spending target of Rs 11.11 trillion which is 3.4% of the GDP reassures that Government spending will keep the capex momentum going till the time that private capex picks up in a big way.The aggressive target of creating 4.1 cr jobs in 5 years with the support of 5 central sponsored schemes with an outlay of Rs2.1 trillion is a timely intervention. Focus on urban infrastructure, energy security with a pragmatic move to green energy are practical ways to a 5 year Plan. 

 

A detailed outline of what the Govt has identified as the Next Gen Reforms is also a good way to give clarity on the way ahead. From the markets perspective the raising of STCG to 20% and LTCG to 12.5% is a body blow. We need to brace ourselves for a negative reaction in the short term. In the light of all the concerns raised about the hyper active interest in the F&O segment it is not surprising that the STT on F&O has been raised 5 times from 0.02% to 0.1%. Hopefully this will moderate the frenzy in this space.On the positive side, the relief in Income Tax by way of raising the exemption limit to Rs 3 lakhs and standard deduction to Rs 75,000 is very welcome. This will put an incremental Rs 17,500 in the hands of a salary payer and support the consumption led growth in the economy.

 

From the markets perspective the raising of STCG to 20% and LTCG to 12.5% is a body blow. We need to brace ourselves for a negative reaction in the short term. In the light of all the concerns raised about the hyper active interest in the F&O segment it is not surprising that the STT on F&O has been raised 5 times from 0.02% to 0.1%. Hopefully this will moderate the frenzy in this space."

 

Above views are of the author and not of the website kindly read disclaimer