Nimesh Shah, MD, ICICI Prudential AMC
The need of the hour is a reform-oriented budget that will trigger inclusive growth. The budget should focus on providing clarity on disinvestment policies, encourage FDI (foreign direct investment) and concentrate on effective fiscal deficit management—all of which is critical to trigger demand and sustain India’s consumption story.
The government has to encourage capital inflows in the country to ensure that the investment story continues uninterrupted and increased capital inflow generates new employment opportunities for the large young population and continues to turn the consumption wheel by triggering a virtuous circle. There is also a need to define an ecosystem that will help track and realign implementation of policy reforms and increase speed of execution.
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Within the capital market, there is need for a rethink on the dividend distribution tax and corporate tax surcharge. There is also a grey area in the understanding and distinction of long-term and short-term investment, and the differentiation between business income and capital gains. There is need to define these areas to safeguard investor interest and encourage long-term equity investment. There should be a clear status quo on the long-term capital gain tax to ensure that equity investment continues to be a preferred long-term wealth creation avenue.
India is increasingly being viewed globally as an attractive investment destination in an uncertain global environment. The government should capitalize on this opportunity to attract the global investor community, both foreign direct investment and foreign institutional investors.