Market experts initially had low expectations for this Budget, but a recent downturn in small-cap and mid-cap stocks, along with a correction in benchmark indices, has raised hopes for a sentiment boost from the event.
Prime Minister Narendra Modi’s statement invoking Goddess Lakshmi to bless the poor and middle class further fueled optimism, leading to a rally in the stock market. Experts are now looking for measures in the Budget to kickstart the consumption cycle, increase government capital expenditure, lower taxes on securities, all while maintaining fiscal prudence.
Concerns linger about the government’s capex, with investors looking for allocations above ₹11 lakh crore and clear execution timelines for spending. The Finance Minister is urged to avoid introducing new taxes on investors and provide tax rebates to boost consumer spending. Adjusting income tax slabs, relieving taxes on capital gains, and increasing indirect taxes on non-essential items are expected measures to improve household income growth.
Policy measures that enhance ease of capital movement, tax clarity for foreign portfolio investors, and reforms in Gift City could attract global capital flows and make India more competitive internationally. Clarity on taxation of Employee Stock Option Plans and Angel Tax is crucial for the start-up ecosystem. The mutual fund industry seeks favorable tax treatment for debt schemes, restoration of indexation benefits, and the introduction of Debt Linked Savings Scheme among other measures.
Overall, the Budget is anticipated to address key concerns such as tax reforms, capital flow facilitation, and support for various sectors to revive market sentiment and drive economic growth.
