Following the economic survey of 2022, the announcement of the union budget 2022 has been perceived as a mixed bag by many. While we had a look at what all has changed in India since the past couple of decades, the Economic Survey also helped to put in perspective how those changes in infrastructure and policies will aid in the future growth of India. The past being a scorecard of the achievements and failures, there also needs to be a plan, where performance can be improved even further. With the pandemic situation still in place since 2020, impetus needs to be provided to various industries so that a guided growth can be achieved. That is what the Budget 2022 effectively proposed. From an investor’s point of view, this also stands good, since a growth of the economy will translate into better investments and higher returns. Let us look at the budget while understanding the survey and find out what makes this budget good for an investor.
Let us get the obvious things out of the way first. The budget is aimed at improving the economy of the country, so there haven’t been any significant changes in the tax structure. What has been very visible is the government’s thrust on capital expenditure. Impetus is to be provided to connectivity through modern infrastructure under PM Gati Shakti – covering roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. Other key areas of focus for the government will be on promoting digital economy and fintech, tech-enabled development, energy transition, and climate action.
While there has been disappointment for the individual taxpayer, for small savings schemes investors, inclusion of post offices under the core banking system will be good news. Seamless access to accounts online and transfers via bank accounts will also be made possible for those investing with post offices. The craze of cryptocurrencies has not gone unnoticed, and quite an unprecedented steep tax rate of 30% has been proposed for the gains thereof. On the other hand, loss from the transfer of virtual digital assets cannot be set off against any other income. To ensure all such transactions are recorded by the tax authorities, TDS at 1% has been levied at the time of transfer exceeding a certain monetary threshold (INR 50000 for specific people, INR 10000 for others).
Looking at the short-term implications of the budget can prove to be a downer but considering the impetus it provides to the market and the economy in the long term, one can see the benefits that this budget brings to the table. Let us look at some of the major takeaways aimed at improving the market –
1. Investors who are looking at creating a zero net portfolio will be happy to hear about the plans to issue “green” bonds that will be used to raise funds to finance green infrastructure, thereby reducing carbon footprint
2. The startup ecosystem needs a lot more support to gain traction, and a separate committee will help recommend measures to remove regulatory hurdles in scaling up Venture Capital and Private Equity investments
3. Funding for sunrise sectors like digital economy, agri-tech, deep-tech will be promoted via National Investment and Infrastructure Fund and SIDBI (government-backed funds)
4. Tax incentives will be extended to eligible startups that were incorporated in FY2023
5. Surcharge on tax on long term capital gains on unlisted shares has been reduced to a flat rate of 15%
6. International Financial Services Centre will have new services included for foreign investors
7. After the successful disinvestment of Air India at an enterprise value of INR 18000 Cr., the government will now focus on launching LIC’s IPO and other divestment options
Summarizing the points mentioned above, it is evident that the budget this time around is good for investors who are looking at long term stable investments based on technology, infrastructure, and real estate. So, have you started planning out the changes in your portfolio yet? What major changes do you think you will make in your portfolio for the upcoming 5-10 years? Is real estate part of your investment portfolio yet? If not, please visit www.strataprop.com to know how commercial real estate can help you build a stable portfolio in an easy way.