A thriving capital market is critical for balancing the twin deficit problems, says Sudhakar Ramasubramanian, CEO, Aditya Birla Money. In an interview with Ankit Doshi, Ramasubramanian says that this year’s Budget will be challenging and easing KYC norms and focus on capital formation will be key to balancing monetary and fiscal challenges. He also remains optimistic on India equities market.
The Budget is just a day away. There would be so many things to look at – from balancing economic growth and inflation to twin deficits. What are your expectations?
The Budget is going to be challenging. But at the same time, it has become a non-event. To the extent that for this year, the FM has got both, the fiscal challenge and balance of payments challenge. People are looking to see how he is going to balance these numbers. In our view, he has definite options to bring back some of the investment-linked incentives and the country needs them because to a large extent investments in gross capital formation is quite low and further heading down. It will help him get additional revenues and at the same time, it will help jump-start the investment slowdown that we are seeing in the country. So these are some of the things we are expecting.
Are you expecting any announcements specific to the capital market?
We believe that capital market reforms are very critical as many divestment issues are scheduled. We expect some of the discordance between commodity and equity market coming down. The FM will have to provide for making it easier for customers to be able to come and buy a stock. Some element of engagement around the implication of STT and capital gains, which varies for different instruments within the same industry, would be critical. Today we find only commodities doing well because STT-like deduction is not there in commodities. Other way, would be to increase the limit on RGESS.
It is believed that the investment scenario needs to be made conducive for investors?
We expect a lot of simplicity in investment norms (simplifying KYC norms) for individuals and small retail investors below a particular category. There are some changes we expect on some of the investment benefits such as initiatives in infrastructure and life insurance because retail investor money needs to get channelised into long-term instruments. Today, retail participation is very low and investments have gone into gold and real estate. It is not