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Scathing Review, Cursed MF: Capital Mind’s Budget Pieces Elsewhere


Two of our articles have been published in Qz and Outlook. Here is some link love:

Outlook: “Strong Mandate, Weak Budget” – a scathing review of the budget and the market’s response to it.

Arun Jaitley’s first budget sends mixed signals to financial markets, and one strong message: this is not a dream budget. The dream budget, if you heard the political campaign, was one in which taxes would be lower. They aren’t, by much. There’s a token increase in the tax slabs and exemption limits that was long overdue after years of heavy inflation.

The dream budget would not tax us retrospectively—instead, Jaitley has decided there will be a committee that decides if a retrospective tax should apply or not. The budget should have reduced our fiscal deficit—instead, it finds solace in targeting the exact number that the previous government had left behind. The dream budget should have reduced subsidies. They remain, and become bigger.

The budget speech itself saw the markets oscillate from the deep disappointment that there was nothing major to expect to an opt­imism that there would be, and finally a resi­g­nation that this government was ano­­ther one that would spend Rs 200 crore on a statue while allocating Rs 100 crore for a metro project in Lucknow.

QZ India: The budget just killed a massive, lucrative segment of India’s mutual fund industry (on the debt fund taxation)

The new budget is going to leave mutual fund and asset management companies fuming.

That’s because the majority of money in mutual funds is invested in debt-oriented schemes—short or long-term debt, issued by the government or by companies. These debt-focussed funds are a different asset class from equity funds, which invest in the stock markets, and hold nearly 60% of the assets under management in India’s mutual fund industry. The budget has effectively wiped out a tax loophole that makes these funds so attractive to investors.


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