QFIs' entry to deepen bond markets: Atul Singh

The Budget seems to be a non-event, with no clear road map for several key reform-related matters like DTC, GST, subsidy reduction on petroleum goods, etc. The finance minister has emphasised the importance of capital markets. To deepen participation of equity markets, a new equity investment scheme (Rajiv Gandhi Equity Saving Scheme) is proposed for retail investors. It provides them income tax deduction of 50 per cent for investment of up to Rs 50,000 in equities (details of the scheme are still to be provided). Another important proposal is to allow QFIs to invest in Indian bond markets which is expected to attract more foreign funds to India and will deepen the bond markets. The approved limit of Rs 60,000 crore of tax-free bonds for financing infrastructure projects will provide investors with investment opportunities. From a tax perspective, providing tax relief through enhancing the 20 per cent slab to Rs 10 lakh and marginally reducing transaction cost of equity investments by reducing STT on cash delivery by 20 per cent are positive steps. Lastly, from the operational efficiency perspective, the proposed central KYC depository aims to resolve the perennial issue of duplication of efforts by investors and wealth managers alike.

Atul Singh MD and head (global wealth & investment management, India) DSP Merrill Lynch