Budget 2018: Since the government has received constant criticism for not generating enough jobs, Finance Minister Arun Jaitley is most likely to focus on employment generation in Union Budget 2018-19. Along with rural sector, infrastructure sector is most likely to remain the focus of policy formation in Budget 2018, renowned investment advisor Sandip Sabharwal says. “Infrastructure investments will continue to get focus. Rural economic revival via farmer support as well as investments in the Rural areas will also be a key focus. The government has got flak on employment generation and as such this will be another area where we could see some policy focus. Overall, with GST now in place, the focus will be on economic revival,” Sandip Sabharwal of asksandipsabharwal.com tells FE Online in an interview. Investors should remain bullish on companies invested in rural sector, advises Sandip Sabharwal. “Stock investments should not be event driven and as such I do not recommend any investments based on that. However, companies that gain out of investments and rural consumption revival should remain a focus of investors in the domestic context,” Sandip Sabharwal says.
Here are the edited excerpts of Sandip Sabharwal’s interview with Ashish Pandey of FE Online:
Q1. What are your expectations for Budget 2018? Do you see it as populist or reformist?
The PM is on record and has said that the budget is unlikely to be populist. However in the context of the upcoming key Assembly elections the probability of some amount of populism is expected. Reforms are an ongoing process and are well accepted among the public now and as such the Budget 2018 is unlikely to do much on that front. Even news flow of strategic disinvestment of Air India has been absorbed without much of a fuss. I believe next one year will be about implementation rather than new measures. Overall some populism related to the Rural Sector should be there.
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Q2. Do you think holding period for LTCG tax on equities will be altered in Budget 2018?
It might be and if it is then it is not a negative. People focus on the payment of Long Term capital gains tax, however there is the other side of potential carry forward of losses too. In bear markets when people sell stocks they have held for more than a year there is no carry forward benefit of the losses however that opens up if the holding period is increased. In any case I do not believe that people take decisions on investing in equities on whether they will have to pay a tax on the profits or not. Overall I think that no tax tinkering might be done this time, however even if it is done it will be well absorbed.
Q3. What can be the likely surprises in Budget 2018 for the common man?
Increase in tax exemption limits and potentially lower tax slabs might be a positive. However, I believe that this times budget has lower possibility of having any drastic measures which could alter things either way.