● FISCAL DEFICIT 4.9% ● BUDGET SIZE `48.2 trn OF GDP, DOWN BY `72,000 CRORE OR 0.22% OF GDP FROM INTERIM BUDGET ● GROSS TAX REVENUE OR 14.8% OF GDP VS 15% IN FY24 AND 17.7% IN FY21 MUMBAI, WEDNESDAY, JULY 24, 2024 `38.3trn UP 11.7% OVER FY24; BUOYANCY 1.1 AGAINST 1.3 IN 2023-24 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL LXIV NO. 175, 32 PAGES, `12.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 80,429.06 ▼ 73.02 NIFTY: 24,479.05 ▼ 30.20 NIKKEI 225: 39,594.39 ▼ 4.61 HANG SENG: 17,469.36 ▼ 166.52 `/$: 83.69 ▼ 0.03 `/€: 90.96 ▲ 0.18 BRENT: $81.55 ▼ $0.85 GOLD: `69,296 ▼ `3,579 CAPITAL GAINS TAX REJIGGED THE BIG IDEAS BIG TAX SHAKE-U PROPERTY SELLE P FOR RS cial Short-term gains of finan % tax from assets to attract 20 ital gains 15% now; long-term cap 10% tax raised to 12.5% from Long-term capital gains tax on property sales re duced to 12.5% from 20%, but indexation benefit s scrapped RELIEF FOR FOREIGN FIRMS, STARTUPS firms Corporate tax for foreign % to 35%; reduced from 40 angel tax abolished for all too investors, Google tax goes CUSTOMS TWEA K MAKING IN INDIAS FOR Import duty on go ld and silver cut to 6% from 15 %, import tariff on mobile ph ones reduced to 15% from 20% SMALL GETS A BIG PUSH Budget gives income tax breaks,incentives for job creation KG NARENDRANATH NIRMALA SITHARAMAN, FINANCE MINISTER T HE FIRST BUDGET of the Modi 3.0 regime bore the imprint of policy continuity, and balanced growth impulses with tenacious fiscal consolidation, even as it used the resultant limited means to address the concerns aroundsocialandeconomicequity. Finance minister Nirmala Sitharaman's speech left no trace of an acknowledged intent for course correction, or a big shift awayfrom a growth model driven by public capital expenditure that seems to have almost run its course. Hopes are still largely pinned on Corporate India taking the baton, sooner than later. Nonetheless, the Budget gave greater thrust to provide “opportunities” for the “small”among the economicactors.It rolled out a clutch WILLTHE OLD TAX REGIME BE SCRAPPED NEXT YEAR? FM: CANNOT SAY WHETHER THERE WILL BE A SUNSET ON THE OLD TAX REGIME NI Election results force govt to buy time on reform moves FE BUREAU New Delhi, July 23 73.04 points (0.09%) 80,502 July 23 (close) 80,429 JOYDEEP GHOSH Mumbai, July 23 Top Sensex HDFC Bank -1.4 Axis Bank -1.6 -3.1 -2.2 -1.7 SBI WHILE THE GENERAL mood around losers (% loss) the Budgetwas upbeat,therewas a sting in the tail for investors in the form of higher taxes on both short-term and long-term capital gains (STCG & LTCG). Experts said while one can understand the need to curtail retail enthusiasm in the future and options (F&O) segment, which led to the increase 79,224 in the securities transaction tax (STT), increasing the STCG from 12:30 PM 15% to 20% and LTCG from 10% to 12.5% is rather harsh. Shankar Sharma, founder, GQuant, said, “The changes in capital gains tax were not necessary. These are extremely sharp (25-33% hikes),while at this juncture we need to encourage equity partici- taxes always helps in the long run,”he said. pation.” Another fund manager who did Kotak Mutual Fund MD Nilesh Shah not wish to be named said that the commentedthatwhiletheSTCGandLTCG increase in the tax rate is a body blow. taxation were increased, no change in the SwarupAnandMohanty,vicechairman tenure for long-term capital gains tax for & CEO,Mirae Asset Investment Managers equities would likely aid longer-term (India), also termed the increase in tax on investment horizon. LTCG as a big negative.“Given the lowpenetration of financial assets,consistency of Continued on Page 16 Bajaj Finance GET UD MANYECONOMICPUNDITShadvotedfor abigpushtoimportantreformsintheFY25 Budget,which was seen as an opportune moment to signal the direction and vision of the government.But a coalition government may have prompted the move to go slowand instead buytime. All that the Budget proposed, termed next-generation reforms,was formulation of an economic policyframework inwhich land,labour,capitalreformscouldbeincentivised. But there is no timeline for when thesewillseethelightofday.Inherspeech, the finance minister only said “effective implementationofseveralofthesereforms requires collaboration between the Centre and the states,andbuilding consensus”. On other reforms, the Centre has promisedtoreviewthedutyregimeandthe I-T law, but no deadlines have been announced.Theywerewidelyexpectedtobepart of the newgovernment’s100-dayagenda. In her Budget speech,the FM said,“For promoting competitive federalism and incentivising states for fasterimplementation of reforms, I propose to earmark a significant part of the 50-year interest-free loan”.InherinterimBudgetspeech,shehad announcedtheschemeof50-yearinterestfree loan for capex to states would be continued in FY25with a `1.3-trillion outlay. Continued on Page 16 THEIR TAKE NILESH SHAH K KRISHNAMURTHY DINESH KHARA SAJJID CHINOY CHAIRMAN, MARUTI SUZUKI INDIA ■ PAGE 2 MANAGING DIRECTOR, KOTAK AMC ■ PAGE 5 CHIEF EXECUTIVE OFFICER, FLIPKART ■ PAGE 6 CHAIRMAN, STATE BANK OF INDIA ■ PAGE 11 CHIEF INDIA ECONOMIST, JP MORGAN ■ PAGE 13 INSIDE RC BHARGAVA 02 05 CONSUMER I MILD PUSH TO BOOST CONSUMPTION INVESTOR I VOLATILE DAY AT DALAL STREET 06 07 DIGITAL I STARTUPS CHEER ANGEL TAX MOVE TAX I MORE STEPS TO ENSURE TAX CERTAINTY 08 RURAL & AGRI I SLEW OF MEASURES FROM JOBS TO HOUSING 25 B SENSEX L&T ON of initiatives to boost job million internship U creationandskilling,and opportunities. increased the incentives For the finanto the small and cial year 2024-25, medium industries, however, the addiand various staketional expenditure holders in the rural from the February 0 202 -2 economy, principally interim Budget estimate 4 the farmers,andwomen. will be just `55,000 crore; The assorted new schemes, with capital expenditure most to run over the next five years, retained at the same level. include several employment-linked That takes the Budget size to `48.2 sops for firms, a new credit guarantee trillion or 14.8% of the gross domesscheme for MSMEs, interest relief tic product (GDP). The Budget was for educational loans,a tripartite pro15% of the GDP in FY24, and 17.7%, ject with states and industrythat aims when the fisc expanded suddenly, to impart job skills to 2 million youth, owing to the pandemic. a doubling of the Mudra loans limit to The multiple tax giveaways in the `20 lakh, and a plan to encourage the Budget,including a furthersweetening top 500 companies to provide 10 of the new exemption-less personal Sting in the tail for investors July 22, 2024 (close) WHAT IS THE INTENTION BEHIND LTCG TAX HIKE? FM: WE WANTED TO SIMPLIFY THE APPROACH. THE AVERAGE TAXATION WILL COME DOWN income tax regime, would cost the exchequer just `37,000 crore. Net of revenuegainsfromothertaxmeasures, the outgo is a measly `7,000 crore. With such economy and a realistic revenue buoyancy estimate of 1.1, the minister proposed to reduce the fiscal deficit in FY25 to 4.94% of the GDP, down 0.22% from the interim Budget level,andtherevenuedeficitbythesame measure to1.8%. That spoke of the government's conviction on the fiscal front, given that the third Modi regime, unlike the previous two, is reliant on allies for majority, and an emboldened Opposition is seeking to put it on the mat for issues like rural distress and an “employment crisis”. So, the gross and net market borrowings forFY2024-25 is estimated at `14 trillion and `11.63 trillion, respectively, both less than in the last financial year. The yield on the benchmark bond, however, ended flat at 6.969%, as a large part of the reduction in governmentborrowingscameintreasurybills, rather than dated securities. The Sensex swung over 1,500 points intra-day and ended down 0.09%. Continued on Page 16 NARENDRA MODI PRIME MINISTER THIS BUDGETWILL ENERGISE THE ASPIRATIONS OF OUR NEO-MIDDLE CLASS AND EMPOWER THE MIDDLE CLASS LIKE NEVER BEFORE. ALSO, UNPRECEDENTED OPPORTUNITIES WILL BE UNLEASHED FOR THE YOUTH