Indian markets have come under pressure recently, with the Sensex correcting by nearly 15% over the past year. While the long term picture for India still looks positive; growth momentum has not met expectations thereby disappointing investors. Corporate earnings have continued to remain sluggish and have failed to enthuse investors as well.
In such a scenario, we would welcome steps by the Government focused towards accelerating growth and improving investor and consumer sentiment in the economy.
Steps that would go a long way in improving demand and thereby top line growth for companies across sectors are:.
–Commitment towards major reforms
–Cuts in duties to boost domestic demand
–Incentives for boosting consumption which could help trigger investments from the private sector
–Cuts of service tax in exports to boost that segment
–Commitments to the domestic industry, particularly metals, through announcements of anti-dumping measures
For higher retail investor participation, the government should announce the following moves:
–Rationalisation of Dividend Distribution Tax
–Increased tax exemptions/incentives for retail investors towards equity
–Aligning tax exemptions with retirement goals
–Increasing the exemption limit for investing in ELSS and including long-term equity in the same
–Expanding the scope of 80CCG to include all retail investors and not just the ‘first time investors’ in equity markets.
–Any direction to increase EPFO corpus towards direct equities, would be watched.
For the brokerage industry, we would expect the following measures:
–Reduced cost of transaction for investors, including lowering of Securities Transaction Tax, exchange transaction costs, SEBI transaction charges as well as service tax and cess.
–Restoring the benefits under 88E for STT
–Ease of KYC would be another welcome move. While the single KYC structure was proposed in the previous Union Budget, however this is yet to materialise.
The author is CEO, YES Securities