Markets and investors have cheered the Budget, which has a bit for almost everyone. "More importantly, the aam aadmi has a bit more to cheer about - revision of tax deduction limit to Rs 2.5 lakh from Rs 2 lakh, raising the limit of 80C exemption to Rs 1.5 lakh from Rs 1 lakh, increased housing loan interest exemption (on self-occupied properties) from Rs 1.5 lakh to Rs 2 lakh and a higher ceiling in public provident fund to Rs 1.5 lakh from Rs 1 lakh. Government has taken bold steps to encourage household savings by reducing tax arbitrage between mutual funds and bank fixed deposits, allowing for greater mobilisation of savings to the more productive economy. Clarity on tax implication of real estate investment trusts and establishment of infrastructure-based investment trusts will also allow investors to leverage the real estate and infrastructure opportunity. Fiscal prudence, liberalisation and transparency have been the key themes of the Budget. By attempting to restrict fiscal deficit to 4.1 per cent of GDP, the FM has addressed prevalent uncertainty in the bonds market.
By inviting foreign investment in defence and insurance, along with tax clarity on equity transactions by foreign investors, the Budget has paved the way for improved flows into Indian equities. By laying greater emphasis on infrastructure, power, roads and ports, the FM has laid down a pragmatic yet sanguine path for economic revival.
Vishal Kapoor Regional Head, Wealth Management, South Asia & Head, Wealth Management, India at Standard Chartered Bank