Mutual fund industry had been high on expectations about the possible modifications in the Rajiv Gandhi Equity Savings Scheme (RGESS), the most talked about investment vehicles to attract retail money into equity markets. However, the announcement today fell short of expectations says Navneet Munot – Executive Director & CIO of SBI Mutual Fund.
Some of the key changes made this year were on the accessibility part hoping to reach out to a wider class of people. For this, the Finance Minister announced that the benefits under RGESS can be availed by the first time investors having income up to Rs 12 lakh per annum.
Earlier the income limit was at Rs 10 lakh. In addition to it, the scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares, not in one year alone, but in three successive years. The scheme allows investors to invest up to Rs 50,000 a year to claim tax rebate.
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According to Munot, “There is nothing in the Budget that would make the retail investors come back into the equity markets as such but the Finance Minster has mentioned the point about ensuring savings come back into the financial markets other than physical assets.”
Expressing his doubts floated inflation index funds he clarifies that the devil lies in details. He says, “Even though the announcement has been done, we have to wait and watch for the details as to how lucrative it is.”
However commenting on the overall Budget, he is more optimistic as he admits that this was one Budget where the expectations were running very high. He adds, given the political backdrop as well as the tough global environment and the fiscal constraints, the Finance Minister has walked the tight rope and done a good job.
Adding to this Gaurav Mashruwalla, a Certified Financial Planner, points out that for buying mutual funds you need a demat account, which many investors may or may not have. Also, one really has to find out whether it is somebody's first time investment.
