The Right Budget

The frustration for most of us has been quite simple – why aren’t we getting the reforms we need? It’s not a coalition government and yet all the Budgets were just incremental!! All that disappointments destroyed with this one Budget!!

Watching the budget was like watching Rishabh Pant bat – you were biting your nails waiting for that edge that thankfully didn’t come. Most of us were asking for 3 things and we got all those and more. And so, how is the market rejoicing? Highest market move in 20 years – see data for that past decade!

It is gaining strength even as I write this blog!!


Let’s first talk about what the Budget didn’t do? After all, a good inning is also about not giving chances and letting go of the good balls!!

  1. Taxes were not raised! Don’t tell me you were expecting a tax reduction!! I was expecting a Covid cess and yes, there was none!!

  2. Don’t give my tax as “subsidies” and yes there were NO freebies!!

  3. No dampeners for investors – no tweaks to Capital Gains!!

KEY HIGHLIGHTS

  1. Fiscal Deficit – Moving from a fiscal deficit target of 3.5% to 9.5% is massive! The target for next year is also kept at 6.8%. When will one spend if not this year??

2. Spend, Spend, Spend – Govt. will spend 35% more on infrastructure. Additionally, institutional structures will be created to monetize assets and achieve the goals of the National Infrastructure Pipeline (NIP). Healthcare, as expected is getting its due with a proposal to double the spend!

3. Disinvestment, Privatization and Monetisation: We all knew LIC IPO was in the books and so is the govt’s attempt to sell Air India, BPCL and a few others. But India has never attempted to privatize Banks – this was a holy grail that was never touched!! The FM announced that 2 public sector banks and one General Insurance company will be privatized!! Also, the govt wishes to monetize its assets. Roads operated by NHAI, power transmission assets operated by the Power Grid Corporation, oil and gas pipelines, Airports in Tier 2 and Tier 3 cities, Rail infrastructure, Warehouses and Sports Stadiums…..lots to monetize!


4. Bad Banks – Having worked in banks for most of my life, I believe that creation of a “Bad Bank” is a great idea for 2 reasons – Banks are able to move toxic assets to this bank and this new entity can focus on recovery. One focuses on growth and the other on recovery!!

5. Streamline Taxes – No further changes to tax slabs with certain reliefs

  • Increased faceless tribunals

  • IT returns with pre-filled investment data

  • IT notice within 4 years (for most cases)

  • Capital Gains on ULIPs same as Mutual Funds (Yeehaw)

  • Senior citizens above 75 years also get some tax filing relief.

Overall, a very good budget. Most industry leaders and rating agencies seem to concur…. and surely the market is partying!!


And now, of course, there remains the part of implementation….but that’s for another day!!

For now, let’s enjoy the long due Growth focused budget!!

Source: Moneycontrol, Tata MF and BusinessToday


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