Nearly three months hence, Finance Minister (FM) Mr Arun Jaitley would be presenting his first full budget. And mind you, there are huge expectations of electorates who voted the Modi-led-NDA to power by a thumping majority. So everyone’s bound to keep a close watch on the union budget 2015-16. While corporates are expecting second round of reforms through friendlier policies, tax breaks and other concessions that may improve their business prospects; farmers are people engaged in agricultural activities want the FM to address their concerns.
One section of the economy that always has modest expectations from the budget is salaried individuals and the middle-class. However, this year salaried individual and middle-class may be in for a pleasant surprise. Speaking to the media lately, FM expressed his desire not to burden salaried and the middle income earning group with more taxes, but instead expressed that he would go after the evaders in widening the tax net.
So what can the middle class expect?
Increase in the current base exemption limit of Rs 2.5 lakh (if revenue collection of the Government is higher)
One may expect a few more tax deductions in the coming budget
Tax concessions on homes loans and savings could stay unchanged
No further hike in income tax rates
But in the endeavor to meet tax revenues and walk tight on the path of fiscal consolidation, one may not see too many tax exemptions and cut in the indirect taxes.
What’s more?
The FM may also dole out the second leg of reforms which if perceived conducive by the sectors and industries may provide the required impetus to the Indian economy. Nevertheless, he also opined that the reforms should take place throughout the year and shouldn’t be announced only in budgets. Having said this, he has expressed that one may expect a lot of exciting times ahead. The immediate agenda to get reforms rolling for the Modi-led-NDA Government is:
Getting insurance amendment bill through
Making progress on GST bill
Resolving important mining related issues and working on coal ordinance
Making progress on GST bill
Resolving important mining related issues and working on coal ordinance
You see, infrastructure development and progress in manufacturing remains the key to turbocharging the economy. FM is also of the view that more sectors need to be opened up for investments. Likewise, boosting investors’ confidence seems to be on his radar.
FM believes, the Indian economy has bottomed out but it would require a special effort to drive the growth. Creating conducive environment is important. He reiterated the need for bringing stability in policy and tax regime. And he did not forget to mention that reasonable cost of capital is of utmost importance, hinting the Reserve Bank of India (RBI) Governor to consider a rate cut in the forthcoming policy review meeting (schedule on December 2, 2014).How is the Indian equity market likely to react?
PersonalFN believes, views expressed by FM are raising expectations of investors from the union budget 2015-16. If other factors such as global economic situation, global liquidity, oil prices remain favourable and RBI indeed cuts policy rates before budget; markets may continue its northward journey and a substantial correction may not be witnessed prior to the budget. Having said this, PersonalFN also believes that if FM fails to meet the heightened hopes of investors, markets may give up significantly post-budget.
What should equity investors do?
PersonalFN believes, investors would be better off staying away from speculating on views which instil exuberance. At present valuations in the market seem stretched and thus going gung-ho and investing all your money at market top could turn to be imprudent as the margin of safety seems to have narrowed down. Nonetheless, if your risk appetite permits and if your asset allocation calls for you to invest in equities, staggering your investment would be a prudent approach while taking exposure to equity. You shouldn't buy aggressively, rather buy selectively. Thoughtlessly investing or speculating can be hazardous to your wealth and health. While you may want to bet on themes which are likely to do well amid such times, opportunities style funds which can help you build your wealth. While investing in mutual funds, at present PersonalFN recommends that you opt for SIP / STP route as it will enable you to mitigate the volatility through rupee-cost averaging and power your portfolio with the benefit of compounding. PersonalFN believes that your investment discipline and asset allocation would decide your success in investing.
COLLECTIONS: PERSONAL/FINANCIAL NEWS SIMPLIFIED
R.B.KISHORE
FM believes, the Indian economy has bottomed out but it would require a special effort to drive the growth. Creating conducive environment is important. He reiterated the need for bringing stability in policy and tax regime. And he did not forget to mention that reasonable cost of capital is of utmost importance, hinting the Reserve Bank of India (RBI) Governor to consider a rate cut in the forthcoming policy review meeting (schedule on December 2, 2014).How is the Indian equity market likely to react?
PersonalFN believes, views expressed by FM are raising expectations of investors from the union budget 2015-16. If other factors such as global economic situation, global liquidity, oil prices remain favourable and RBI indeed cuts policy rates before budget; markets may continue its northward journey and a substantial correction may not be witnessed prior to the budget. Having said this, PersonalFN also believes that if FM fails to meet the heightened hopes of investors, markets may give up significantly post-budget.
What should equity investors do?
PersonalFN believes, investors would be better off staying away from speculating on views which instil exuberance. At present valuations in the market seem stretched and thus going gung-ho and investing all your money at market top could turn to be imprudent as the margin of safety seems to have narrowed down. Nonetheless, if your risk appetite permits and if your asset allocation calls for you to invest in equities, staggering your investment would be a prudent approach while taking exposure to equity. You shouldn't buy aggressively, rather buy selectively. Thoughtlessly investing or speculating can be hazardous to your wealth and health. While you may want to bet on themes which are likely to do well amid such times, opportunities style funds which can help you build your wealth. While investing in mutual funds, at present PersonalFN recommends that you opt for SIP / STP route as it will enable you to mitigate the volatility through rupee-cost averaging and power your portfolio with the benefit of compounding. PersonalFN believes that your investment discipline and asset allocation would decide your success in investing.
COLLECTIONS: PERSONAL/FINANCIAL NEWS SIMPLIFIED
R.B.KISHORE