Get over LTCG tax shock! 9 booster dosages in Budget 2024 that will reward equity investors handsomely in the long run The benefit of indexation has been partially taken away from houses, land and buildings purchased on or after July 23, 2024. The LTCG tax rate on equity has been hiked to 12.5%. However, it has also provided the guidance on sectors that are likely to reward equity investors in long run
Finance Minister Nirmala Sitharaman presented a landmark Union Budget on July 23, 2024, setting a comprehensive roadmap for a developed India by 2047, a vision named 'Viksit Bharat'. While the government has partially restored the indexation benefit on long term capital gains from property, land and building (indexation phenomenon of India was anyway something unique globally), increasing capital gains tax rate on equity , there are quite a few things of the budget which have gone unnoticed which have the potential to create a better life and good amount of wealth generation for its citizens. However, they have probably got buried in the negative din and also because they are a heavy read, too voluminous for most of us to go through.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} We all know that India is the fastest growing major economy in the world, growing at a high GDP rate for the past four years, despite plenty of global and local disruptions. The current budget has tried to further strengthen the economy to sustain this high growth rates in the long term. To be able to do that, the Govt has identified nine priority areas which, as per the Govt, will continue to figure in the next budgets for the Govt's rest of the term. These areas point at parts of the economy which continue to remain weak or need a booster growth dose to enable the march to the goal of 'Viksit Bharat' by 2047. I have tried to capture their essence in this article.
Before I go ahead, a normal question that could be asked - "that's something which is not happening in 'my world', how does it concern me?" This is so because a large number of us seem unable to make connections between what's happening in the economy at large and the money that they have made from their equity and mutual fund investments.
We all have seen the great infrastructure buildout that's happening - it could remind one of the infra push in the USA in 20th Century. And this has happened while maintaining a good fiscal balance, and a good growth rate despite Covid and so many other challenges. No other large economy around the world has managed to do so.
So, anybody with some interest in equity investing or having benefited from it in the past two years would've seen how our equity CAGR (Compounded Annual Growth Rate) has inched up to really impressive numbers. This is 'India Tailwind' for almost all of us who may have some misconceptions about our own self being great investors or stock-spotters. It is in fact the strength of Indian economy which has made stock markets go up.
Coming back to the start point, let us see what is the Govt aiming to go ahead with which has a big potential to ensure that the economy continues to do well making the stock markets remain strong and equity investors continuing to gain from its long-term uptrend.
Agriculture Productivity and Resilience: The budget addresses low productivity in agriculture, aiming to enhance yield through research and innovation. Plans include releasing 109 high-yielding and climate-resilient crop varieties, promoting natural farming for one crore farmers and implementation of Digital Public Infrastructure (DPI) in agriculture.
Employment & Skilling: Recognizing the demographic dividend, the budget focuses on skilling and employment. Three 'Employment Linked Incentives' schemes based on EPFO enrolment will be launched, with a target to generate 4.1 crore jobs over the next five years and an allocation of Rs 2 lakh crore. Additionally, Rs 1.48 lakh crore is allocated for skilling 20 lakh youth, upgrade 1,000 industrial training institutes and offer internship opportunities in 500 companies for one crore youth, who will receive a monthly allowance of Rs 5,000.
Inclusive Human Resource Development and Social Justice: The budget adopts a saturation approach to education and health, with continued support for craftsmen, artisans, self-help groups, and marginalized communities through schemes like PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Mudra loans.
Manufacturing & Services: To boost the MSME sector, the budget introduces initiatives such as the Rs 5 lakh crore Emergency Credit Line Guarantee Scheme to help MSMEs enhance their global competitiveness. Plans include the development of "plug and play" industrial parks, rental housing for industrial workers, and increased Mudra loans.
Urban Development: Urban development envisions 'Cities as Growth Hubs' through economic and transit planning, with a focus on developing peri-urban areas, Transit Oriented Development, more housing under PM Awas Yojana Urban, and efficient rental housing markets.
Energy Security: Energy security policies will balance employment, growth, and environmental sustainability, with initiatives like PM Surya Ghar Muft Bijli Yojana, Pumped Storage Policy, and the development of small and modular nuclear reactors.
Infrastructure: Infrastructure development remains a priority, with significant allocations for roads, highways, railways, airports, and more. Long-term interest-free loans to states, market-based financing frameworks, and private sector participation will support infrastructure creation.
Innovation, Research & Development: Innovation and R&D will be scaled up through the Anusandhan National Research Fund and a Rs 1 lakh crore financing pool for private sector-driven research and innovation. The space economy will be expanded with a Rs 1,000 crore venture capital fund.
Next Generation Reforms: Next-generation reforms will improve productivity of factors of production and enhance market efficiency. The government will formulate an Economic Policy Framework to guide these reforms, emphasizing the digitization of land records and proper mapping of urban and rural land.
Overall, the Union Budget 2024 is a forward-looking document aimed at sustaining high growth rates and addressing challenges to achieve the goal of 'Viksit Bharat' by 2047. Through strategic investments in agriculture, employment, manufacturing, urban development, energy security, infrastructure, innovation, and next-generation reforms, the NDA Government aims to propel India towards becoming a developed nation. This ambitious roadmap is poised to boost investor confidence and drive robust equity markets, heralding a new era of economic prosperity in India.
(The article is written by Col Sanjeev Govila (retd), Certified Financial Planner, CEO, Hum Fauji Initiatives, a financial advisory firm.)
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
