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<ul><li>The ‘<keyword id="6370279" type="General" weightage="100" keywordseo="smart" source="Orion">Smart</keyword>’ SIP tweaks the amount of investment or withdrawal based on equity valuations. </li><li>The feature is available for all open-ended schemes, Equity Index Funds and Kotak Equity Hybrid Fund. </li><li>The valuations are decided based on the net equity allocation of the <keyword id="6699302" type="General" weightage="50" keywordseo="kotak-balanced-advantage-fund" source="Orion">Kotak Balanced Advantage Fund</keyword>. </li></ul> One of India’s largest asset management companies <keyword id="119509" type="General" weightage="50" keywordseo="kotak-mutual-fund" source="Orion">Kotak Mutual Fund</keyword> today launched a smart SIP feature for investors to profit off the volatility in the equity market. An SIP or systematic investment plan allows users to invest a fixed amount of money in a mutual fund over a certain period of time. The Smart SIP tweaks the amount of investment or withdrawal based on equity valuations– cheap, neutral and expensive. So, when market valuations are expensive, the monthly SIP installment will be half of the base amount. And if they become cheap, the installment would be twice the base amount. “The smart facility will help investors who are looking for an equity valuation-based investment approach to invest for their long-term goals. Equity markets will continue to be volatile. Smartness is in using this volatility in our favour. This is easy to understand and even easier to invest in,” said <keyword id="45076" type="General" weightage="50" keywordseo="nilesh-shah" source="Orion">Nilesh Shah</keyword>, <keyword id="5066833" type="General" weightage="20" keywordseo="md-group" source="Orion">MD &amp; Group</keyword> President – Kotak Mutual Fund. The valuations are decided based on the net equity allocation of the Kotak Balanced Advantage Fund, which uses a combination of adjusted trailing Price to Earnings ratio (P/E ratio), and the trend as well as the sentiment data. This platform is also available for redemptions through systematic withdrawal plan (SWP). The smart SWP enables the investor to redeem a higher amount when equity valuations are expensive and a lower amount when valuations are cheaper. Investors can also opt for this option through the systematic transfer plan (<keyword id="6356209" type="General" weightage="50" keywordseo="stp" source="Orion">STP</keyword>) route. The new initiative is available for all open-ended equity schemes, Equity Index Funds and Kotak Equity Hybrid Fund. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/markets-to-keep-a-close-watch-on-us-and-indian-inflation-data/articleshow/93419790.cms">Sensex up 300 points on crude price fall, rally in auto and metal stocks</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sports/news/commonwealth-games-medals-tally-at-2022-birmingham-games/slidelist/93274345.cms">Commonwealth Games 2022: India has won 18 gold medals so far, check out all the details here.</a>

Now, a smart SIP that alters your monthly installment as per market valuation

<ul><li>Indian benchmark stock indices have nearly doubled since crashing in March 2020.</li><li>However, the economic situation might leave you confused if you compare it with the <keyword id="6357440" type="DEFINITION" weightage="20" keywordseo="Stock-Market">stock market</keyword> performance.</li><li>But there is a reason why the stock markets are on a bull run while the economy hasn’t picked up pace yet.</li><li>Nilesh Shah, the managing director of <keyword id="831683" type="COMPANY" weightage="20" keywordseo="Kotak-Mahindra-Asset-Management">Kotak Mahindra Asset Management</keyword> company explains this phenomenon using a simple analogy.</li></ul>The Indian stock markets have seen a bull rally like we’ve never seen before. After the bear hug in March 2020, Indian stock markets Sensex and Nifty have almost doubled after a rally of nearly 90%. <div type="image" title="Sensex Nifty 2020" msid="80339396" hostid="261" caption="&amp;lt;p&amp;gt;A look at Sensex and Nifty trends since January 2020.&amp;lt;/p&amp;gt;"></div> This has left many retail investors confused, making them wonder when the markets will correct and fall. To understand why the markets have been rallying, Business Insider India spoke to Nilesh Shah, the managing director of Kotak Mahindra Asset Management company. To explain this phenomenon, Shah drew an analogy with 1977 blockbuster Hindi film Amar, Akbar, Anthony, starring Amitabh Bachchan, Bollywood’s most-celebrated actor. <div type="Youtube" id="v02oeojB4Jk" title="One Of India's Money Managers Explained ‘The Mother Of All Bull Runs’ Using Amar, Akbar, Anthony" thumbUrl="https://i.ytimg.com/vi/v02oeojB4Jk/mqdefault.jpg"></div> “Our markets witnessed an impossibility – from the mother of bear markets in March 2020 to the mother of bull markets in December 2020, this is the fastest ever bull run that has happened. In our equity markets, three Amar Akbar Anthony came together – flows, sentiments and fundamentals,” he said. Nilesh Shah has been part of the Prime Minister’s Economic Advisory Council since October 2019. <div type="image" title="FII activity Feb-Dec 2020." msid="80339418" hostid="261" caption="&amp;lt;p&amp;gt;FII activity since Febrauary 2020&amp;lt;/p&amp;gt;"></div> Many sceptics argue that the recent rally cannot sustain⁠, and that a sharp fall is inevitable, given that the economy as a whole has contracted. In his retort, Shah explained that while markets are forward-looking, economic data is backward-looking. He cited the spike in GST collections ⁠—<a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1685332"> a record high in December</a> ⁠— aside from<a href="https://www.gstatic.com/covid19/mobility/2021-01-12_IN_Mobility_Report_en-GB.pdf"> data from the Google mobility index</a> and the Reserve Bank of India’s<a href="https://economictimes.indiatimes.com/markets/forex/forex-reserves-up-by-758-mn-to-lifetime-high-of-586-082-bn/articleshow/80289432.cms"> foreign exchange reserves</a> to back his argument. “Put all of this data together, we are seeing a month-on-month improvement in the economy,” Shah explained. <div type="image" title="GST Collections 2020" msid="80339488" hostid="261"></div> <cmsannotation type="cmsannotation" annotationid="Unemployment numbers show a decline, too" comment="subhead" text="Unemployment numbers show a decline, too">Unemployment numbers show a decline, too</cmsannotation> Shah notes that the unemployment number for the beginning of January is 7.4%, down from 9.06% in December. “The economy is slowly and steadily improving, and that is reflecting in our PMI number which is in the expansionary zone,” Shah said. According to data obtained from Centre for Monitoring Indian Economy (CMIE), unemployment rates have shown an improvement when compared to the peak of the COVID pandemic. <div type="image" title="Unemployment in India 2020." msid="80339445" hostid="261" caption="&amp;lt;p&amp;gt;India&amp;#39;s unemployment rate in 2020.&amp;lt;/p&amp;gt;"></div> As far as Shah is concerned, the rally has been spectacular but it is not a bubble yet. There are those, like<a href="https://www.businessinsider.in/stock-market/news/jim-rogers-said-that-if-he-had-bought-apple-and-tencent-stocks-before-he-would-have-sold-them-by-now/articleshow/80286968.cms"> Jim Rogers</a>, who disagree. SEE ALSO: <a href="https://www.businessinsider.in/budget/news/india-may-be-considering-a-covid-cess-on-high-income-earners-aside-from-more-levy-on-fuel/articleshow/80208520.cms">India may be considering a COVID cess on high income earners — aside from more levy on fuel</a> <a href="https://www.businessinsider.in/policy/economy/news/union-budget-2021-22-manufacturing-atmanirbhar-bharat-healthcare-can-be-main-themes/articleshow/80044041.cms">Atmanirbhar Bharat, manufacturing and healthcare may be central themes in India's budget for next year</a> <a href="https://www.businessinsider.in/budget/news/here-are-the-major-changes-that-could-reportedly-come-up-with-the-union-budget-2021-by-nirmala-sitharaman/articleshow/80325146.cms">Budget 2021: From Income Tax deductions to creating jobs and boosting healthcare – Here’s all that could be in Nirmala Sitharaman’s fiscal plans</a>

One of India's biggest money managers explained ‘the mother of all bull runs’ using Amitabh Bachchan-starrer Amar, Akbar, Anthony

<ul><li><keyword id="617593" type="General" weightage="20" keywordseo="Kotak-Mahindra-Asset-Management-Company" source="Orion">Kotak Mahindra Asset Management Company</keyword> launches a silver ETF, which will invest in physical silver and silver related instruments.</li><li>The fund house believes this is an opportunity to hedge against the ongoing economic uncertainties and geopolitical risks prevalent across several major global economies.</li><li>Silver ETF is more suited to experienced investors who understand commodity cycles.</li></ul>Kotak Mahindra Asset Management Company on Thursday launched Kotak Silver ETF (exchange traded fund), which will invest in physical silver and silver related instruments. The mutual fund product will provide investors with an opportunity to invest in this precious metal without physically holding it. The ETF’s price will be in line with the price movement of silver. The fund house says this investment product will provide investors an opportunity to hedge against the ongoing economic uncertainties and geopolitical risks prevalent across several major global economies. A silver ETF provides easy access to silver without actually physically holding it and also help in diversifying the investor portfolio. “Our Silver ETF launch is in line with our continued effort to provide easy and efficient access to various asset classes. It will provide convenient access to Silver as an asset which is not only a precious metal but also has many industrial uses. The consolidation in Silver prices since the start of the year provides a good opportunity for those looking to allocate some money to this asset for diversification,” said Nilesh Shah, group president and MD at Kotak Mahindra Asset Management Co. As per the World Silver Survey 2022, post the pandemic, demand for silver has outstripped supply due to uptick in industrial activity and a surge in retail investor appetite for the metal. The metal has clocked 43% absolute returns in the 5-year period. However, the past performance may or may not be sustained in the future. Silver prices are driven by its industrial consumption and supply side dynamics. The precious metal is a hedge against the traditional equity-debt portfolio, as silver has low-correlation with both asset classes. However, silver is a high-risk asset class and, therefore, it is more suited to investors who understand precious metals and commodity cycles. The new fund offer (NFO) of the Silver ETF opens for subscription on November 21 and closes on December 5. The units of the fund will be in the form of creation unit size or in multiples thereof. Each creation unit consists of 30,000 units of Kotak Silver ETF. Each unit is approximately equal to 1 gram of silver, said the mutual fund company. <keyword id="46594" type="General" weightage="20" keywordseo="etfs" source="Orion">ETFs</keyword> are a type of funds that are bought and sold the same as a stock on the exchange and the underlying asset in this case would be silver. The price of the ETF is tracked to an underlying index, here it will follow the price of silver in the real world. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/list-of-indian-and-global-companies-that-have-fired-their-employees-in-the-last-3-months/slidelist/95423791.cms">Here’s a list of Indian and global companies that have fired their employees in the last 3 months</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/paytms-lending-and-merchant-businesses-drive-revenue-growth-in-q2-low-penetration-offers-headroom-for-growth-say-analysts/articleshow/95423464.cms">Paytm's lending and merchant businesses drive revenue growth in Q2 – low penetration offers headroom for growth say analysts</a>

Kotak Mahindra MF launches silver ETFs to hedge against ongoing uncertainties

<ul><li>Experts expect the <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword> to deliver a couple of more 50 bps rate hikes during the course of this fiscal year.</li><li><keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">Inflation</keyword> continues to trend above the RBI’s comfort level with its year-end target at 6%. </li><li>As real interest rates continue to be below inflation levels, RBI will be forced to hike repo rate further from the current 5.4%.</li></ul> The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> delivered yet another rate hike of 50 basis points (100 basis points equal to 1 percentage point), but it is nowhere near done. Given that inflation continues to above the central bank’s targeted upper tolerance band of 6%, rate hikes are expected to be front-loaded. Clearly, 50 basis point rate hikes are the new normal. While this is good news for depositors, who will earn more from fixed income instruments, borrowers will, unfortunately, pay more. Economists and fixed income experts at mutual fund houses expect the RBI to deliver a couple of more 50 bps rate hikes during the course of this fiscal year. Why are interest rates negative? The central bank has been battling a Black Swan events like the Russian invasion of Ukraine and its consequent impact on prices of products ranging from base metals, crude oil to edible oil. While prices of several commodities have cooled down, given that real interest rates continue to be negative, the central bank will continue to increase rates to suck out liquidity from the system to curb prices. Interest rates are considered to be negative when inflation is higher than interest rates, which means that your money is losing value when you keep money in banks as deposits. Interest rates are positive when the benchmark interest rates are higher than inflation. The central bank during the pandemic cut interest rates by 115 basis points, with the key repo rate dropping to 4%. This made loans significantly cheaper for borrowers till the middle of this year. But this cycle is now set to turn, making loans of all kinds more expensive. According to <keyword id="130246" type="General" weightage="50" keywordseo="abheek-barua" source="Orion">Abheek Barua</keyword>, chief economist and executive VP at HDFC Bank, “We expect the RBI to continue with its rate hikes in the upcoming policies taking rates up to 5.75% by the end of the year.” Given that repo rate is at 5.4% and inflation estimate is at 6.7%, the RBI will have to deliver several more rate hikes to take the policy rates even to neutral territory if not positive. Akhil Mittal, senior fund manager-fixed income, <keyword id="128170" type="General" weightage="50" keywordseo="tata-mutual-fund" source="Orion">Tata Mutual Fund</keyword>, is of the view that RBI has taken inflation head-on by raising rates by 50 basis points. “The endeavour to get real rates in positive territory, as mentioned earlier by RBI, gets closer with this move and we expect another 50-bps rate hike by MPC over next couple of MPC meetings before the pause,” he says. <keyword id="42546" type="General" weightage="20" keywordseo="growth" source="Orion">Growth</keyword>, not <keyword id="6357558" type="General" weightage="20" keywordseo="recession" source="Orion">recession</keyword> like other economies Typically when interest cycle turns, growth often comes under pressure as higher prices tend to dent demand and higher inflation expectations prevent companies from undertaking capital expenditure. But in this cycle, the RBI does not expect growth to be impacted and has retained the GDP forecast at 7.2% for FY23. Says Nilesh Shah, group president and MD, Kotak Mahindra Asset Management Company, “The RBI’s hike of 50 bps in repo rate is front-loaded to ensure that easing inflation comes below RBIs upper band of 6% by the fourth quarter of FY23. Since growth is becoming broad-based and private capex is showing signs of revival, the RBI has front-loaded repo rate hike to control inflation. Interestingly, the RBI has kept the Indian economy flying high (7.2 % GDP growth in FY23) through turbulent weather. The RBI has clearly differentiated itself vis a vis many other central banks which are looking to hard land their economy (recession in FY23) to bring down inflation.” SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/globalized-inflation-is-threat-to-global-economy-itself-says-rbi-guv-das/articleshow/93366552.cms">Globalized inflation is a threat to global economy itself, says RBI guv Das</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/hdfc-seals-worlds-largest-social-loan-worth-1-1-billion-for-affordable-housing/articleshow/93366669.cms">HDFC seals world’s largest social loan worth $1.1 billion for affordable housing</a>

Shakti’s Gati on interest rate hikes to continue

<ul><li>Income tax bonanza for the salaried class and the government’s capital expenditure push have emerged as the stars of Budget 2023-24.</li><li>While the income tax exemptions are expected to increase disposable incomes of taxpayers and thereby boost demand, the capex push is aimed at promoting growth and increasing job opportunities, say experts.</li><li>The government also announced a slew of measures for the agriculture and green energy sectors, promoting the use of technology to boost output and transition to green energy.</li></ul>An upward revision in income tax slabs and a continued push on capital expenditure investments emerged as the key highlights of the Union Budget 2023-24. While the revised tax slabs under the new tax regime will benefit the middle-class and salaried individuals, the government also announced a 33% increase in its capital investment outlay for FY24 to boost growth and promote job creation. “We are steering an ambitious people-centric agenda to address global challenges and to facilitate sustainable economic development,” finance minister Nirmala <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> said, announcing the budget. Despite an increase in capital expenditure outlay, the government has continued on its path of fiscal consolidation. Sitharaman said that while the government will meet the fiscal deficit target of 6.4% in FY23, it has been reduced to 5.9% in FY24, and further below 4.5% in FY 25-26. Sitharaman also announced that the gross borrowings are estimated at ₹15.43 lakh crore in FY24, lower than the Economic Survey 2023 estimate of ₹15.77 lakh crore. “This budget is a Bahubali budget. With one arrow multiple targets are shot. Fiscal prudence is achieved with lower deficit and path set till FY26. Consumption is supported through tax cuts. Investment outlay is enhanced. Numbers are realistic or conservative to enhance the credibility,” said Nilesh Shah, managing director, Kotak Mahindra Asset Management Company. <cmsannotation type="cmsannotation" annotationid="Here are all the major announcements of Budget 2023-24" comment="subhead" text="Here are all the major announcements of Budget 2023-24">Here are all the major announcements of Budget 2023-24</cmsannotation> Slabs for income tax computation enhanced under the new regime: Under the new income tax regime, individuals with an annual income of up to ₹9 lakh will now have to pay an income tax of ₹45,000, which is an effective tax rate of 5%. The government has also increased the limit for rebate under section 87A of the Income Tax Act to ₹7 lakh from ₹5 lakh earlier. The following are the new tax slabs: <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Slab </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax rate </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹0-3 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3-6 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6-9 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹9-12 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹12-15 lakh </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹15 lakh and above </td><td style="border-left:solid #000000 0.6000000000000001pt;border-right:solid #000000 0.6000000000000001pt;border-bottom:solid #000000 0.6000000000000001pt;border-top:solid #000000 0.6000000000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table> In addition to this, there’s good news for salaried individuals as well, with the standard deduction being hiked to ₹52,500 from ₹50,000 earlier. Further, the tax exemption limit for leave encashment has been raised from ₹3 lakh to ₹25 lakh. Lastly, the new income tax regime will be applicable by default going forward. However, assessees will have an option to opt out and file their returns under the old regime. “More money in the hands of the middle class will have a cascading effect across the economy which needs this push as we continue to depend on domestic demand to beat the global uncertainty,” Sanjeev Krishan, chairperson, PwC in India. Capital expenditure outlay gets a major boost: In a bid to promote growth and job creation, the government has announced a 33% increase in capital expenditure outlay to ₹10 lakh crore for FY24, or about 3.3% of the gross domestic product (GDP). The capex outlay for FY23 is estimated at ₹7.5 lakh crore. Sitharaman outlined that infrastructure is one of the seven priorities of the government, which is now backed by the 33% increase in capex outlay for this segment. Overall, the government’s capex outlay has increased over three-fold from ₹3.1 lakh crore in FY19 to ₹10 lakh crore in FY24. Here’s how the government’s capex spending has trended since 2019 <div type="image" title="Capex spending FY19-FY24." msid="97524051" hostid="261" sizebytes="16064" caption="&amp;lt;p&amp;gt;Indian government&amp;#39;s capex spending trends since FY19&amp;lt;/p&amp;gt;"></div> “This is a positive development for domestic commercial vehicle space and more so for medium and heavy commercial vehicle (M&amp;HCV) domain,” said ICICI Direct. The government announced an allocation of ₹2.7 lakh crore for roadways and ₹2.4 lakh crore for railways. “A 33% increase in capital expenditure to ₹10 lakh crore, the highest ever, will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination. Investment of ₹2.4 lakh crore in railways is commendable,” said Anand Rathi, founder and chairman, Anand Rathi Group. Apart from this, Sitharaman also announced an outlay of ₹10,000 crore per annum to develop urban infrastructure. The government has also announced a 66% increase in funding for the PM Awaas Yojana to ₹79,000 crore in FY24, which will benefit engineering, production and construction companies. Further detailing the infrastructure push, Sitharaman said that the government has identified 100 critical transport infrastructure projects for steel, ports, fertilizers and other sectors with an investment outlay of ₹75,000 crore, which includes a private sector investment of ₹15,000 crore. Agri Accelerator Fund to encourage innovation: In a bid to promote the adoption of technology in the agriculture sector, the government announced a new Agri Accelerator Fund to promote agri-tech startups in rural areas, with a cluster-based and value chain approach through public-private partnerships. “The proposal to set up an Agri Accelerator Fund for agri-tech startups is a welcome move, and was much anticipated. Agri-tech startups who are focusing on improving the market reach for agricultural products and produce, as well as last mile delivery of products to farmers should benefit from this move,” said Raj Ramachandran, partner, JSA. Sitharaman also announced a slew of measures for the agriculture sector, which are: <ul><li>Increase in agriculture credit target to ₹20 lakh crore, with a special focus on animal husbandry, dairy and fisheries.</li><li>A new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of ₹6,000 crore to further enable activities of fishermen and fish vendors.</li><li>Computerisation of 63,000 primary agricultural credit societies with an investment outlay of ₹2,516 crore.</li></ul>Green energy ambitions get a boost: The government also announced a slew of measures to encourage and promote green energy in India, including ₹35,000 crore priority capital for transition from fossil fuels to green energy. Of this, the specific outlay for National Hydrogen Mission has been set at ₹19,700 crore. The government has set a target of 5 million metric tonnes of hydrogen production capacity by 2030. Key players in the hydrogen space are Mukesh Ambani and Gautam Adani. Their green energy bets, primarily based on green and blue hydrogen, amount to $125 billion. <cmsannotation type="cmsannotation" annotationid="‘Force multiplier’ budget, say analysts" comment="subhead" text="‘Force multiplier’ budget, say analysts">‘Force multiplier’ budget, say analysts</cmsannotation> Overall, the budget has been well-received by experts, with the broad consensus being that this is a growth-oriented budget. “Growth with fiscal consolidation continues to be the continuing theme with capital expenditure at 3.3% of GDP while being committed to the long term 4.5% deficit target. Providing more incentives under the new tax regime to middle class Indians, will also widen the net of those who can invest,” said Radhika Gupta, MD and CEO, Edelweiss Asset Management. Sensex zoomed 1,180 points reacting to the tax announcements made by the government. The tax exemptions under the new regime will increase the disposable income in the hands of taxpayers, according to ICICI Securities, helping boost demand. “In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on infrastructure and agriculture which in our view would have a force multiplier impact on the economy,” said S Ranganathan, head of research at LKP Securities. According to economists, the reduction in fiscal deficit targets for FY24 through FY26 will also offer relief for bond markets, with the 10-year bond yield projected to moderate to 7-7.1% in FY24, according to Abheek Barua, chief economist, HDFC Bank. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/sensex-zooms-as-finance-minister-delivers-tax-bonanza-to-middle-class/articleshow/97510050.cms">Sensex zooms 1,180 points as FM delivers tax bonanza to middle-class</a> <a href="https://www.businessinsider.in/budget/news/budget-2023-24-nirmala-sitharaman-speech-highlights-and-updates/articleshow/97512649.cms">Budget 2023-24 highlights: Those with income below ₹7 lakh a year need not pay income tax</a> <a href="https://www.businessinsider.in/budget/news/government-to-set-up-three-centres-of-excellence-in-artificial-intelligence/articleshow/97520242.cms">Budget 2023 gives a boost to artificial intelligence – government to set up three centers of excellence</a>

Income tax bonanza, capex push emerge as the stars of Budget 2023-24

<ul><li>The Production-Linked Incentive scheme was introduced by the central government in March 2020.</li><li>The scheme provides an incentive of 4-6% to eligible companies on sales of goods manufactured in India for a period of five years.</li><li>Domestic brokerage house Sharekhan by BNP Paribas estimates that the scheme may add $520 Billion to India’s GDP over the next five years.</li></ul>The Production-Linked Incentive (PLI) scheme was introduced by the government to incentivise and boost domestic manufacturing, as well as attract foreign manufacturers to move base to India. The aim of the scheme is to generate more employment and cut down the country’s reliance on imports from other countries.The programme has an allocation worth ₹1.97 lakh crore, with auto industries getting a lion’s share at Rs 57,042 crores over the next five years. “There is no incentive for setting up a plant, but if your plant starts producing, then there’s an incentive,” says Nilesh Shah, Group President &amp; MD at Kotak Mahindra AMC. “This is coming at a time when businesses are shifting out of China. While other countries have far better infrastructure, maybe even better ease of doing business, none of them have a large market like India.” <div type="Youtube" id="vXbyqWffxzs" title="Budget 2021: Watch Out For Production Linked Incentives In The Budget⁠ — Here’s How It Will Work." thumbUrl="https://i.ytimg.com/vi/vXbyqWffxzs/mqdefault.jpg"></div> The PLI scheme, initially, only covered mobile phones and allied equipment, pharmaceutical ingredients and medical devices. Later, in November 2020, Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> extended the benefits to 10 more labour intensive sectors. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div class="flourish-embed flourish-table" data-src="visualisation/5097888"></div>]]></cdata></div> “The PLI scheme has been structured well, learning from the textile upgradation fund,” adds Nilesh Shah. “It is coming at the right time. If we can create this kind of momentum, then growth will automatically happen. I feel that the PLI scheme could add a percentage point to India’s GDP over a period of time.” According to the <a href="https://pib.gov.in/PressReleseDetail.aspx?PRID=1662096">Ministry of Electronics and Information Technology</a>, Samsung, Foxconn Hon Hai, Winstron, and Pegatron are among the international manufacturers approved for incentives under the PLI scheme. The latter manufacture components for Apple devices. Domestic players such as Lava and Micromax have also been approved. In the upcoming budget session, brokerage house Angel Broking expects the government to expand the scheme to more sectors like footwear, chemicals, and agrochemicals. There are others who want the period for production-linked incentives to be increased in the sectors where it is already applicable. “A five-year incentive scheme is not enough and the Government should commit 10 years and accordingly, the incentive scheme should be expanded,” Shashi Mathews, partner at Induslaw, told <a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms">Business Insider</a>. Brickwork Ratings, however, has a harsher stance on the scheme, noting that it will make sectors dependent on subsidies. “The need of the hour is to improve the competitiveness of the economy, which requires exposing domestic players to international competition. An overvalued rupee and increased tariff protection cannot make the economy competitive,” their pre-budget expectations report says. “There is clearly a need to reverse protectionist trends and to modify the Atmanirbhar campaign to increase competitiveness, rather than erecting protectionist walls.” SEE ALSO: <a href="https://www.businessinsider.in/budget/news/niti-aayog-public-policy-specialist-cites-budget-2021-priorities-for-education-health-food-and-nutrition/articleshow/80476928.cms" data-type="tilCustomLink">From food coupons to a fund to provide laptops and tablets to the poor⁠— NITI Aayog’s public policy analyst has a wishlist too</a> <a href="https://www.businessinsider.in/budget/news/niti-aayog-public-policy-specialist-cites-budget-2021-priorities-for-education-health-food-and-nutrition/articleshow/80476928.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/niti-aayog-public-policy-specialist-cites-budget-2021-priorities-for-education-health-food-and-nutrition/articleshow/80476928.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink">A playbook for Budget 2021 to boost electronics manufacturing in India</a> <a href="https://www.businessinsider.in/budget/news/indias-co-working-sector-wants-recognition-under-real-estate-tax-benefits-as-flexible-workspaces-aim-for-a-significant-revival-in-the-post-covid-era/articleshow/80431768.cms" data-type="tilCustomLink">India’s co-working sector wants recognition under real estate, tax benefits as flexible workspaces aim for a significant revival in the post-COVID era</a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a><a href="https://www.businessinsider.in/budget/news/a-playbook-for-budget-2021-to-boost-electronics-manufacturing-in-india/articleshow/80476759.cms" data-type="tilCustomLink"></a>

SIMPLY PUT: Watch out for production linked incentives in the budget⁠ — here’s how it will work

The Covid-19 induced lockdown might be bad for the rental market but many factors drove people to buy homes in the last one year. Both <keyword id="35507" type="PERSON" weightage="20" keywordseo="property-prices">property prices</keyword> and interest rates have become attractive. Added to that, in cities like Mumbai that had inventory, reduced stamp duty prices stirred the dormant property market. But it’s not just that. <keyword id="45123" type="CITY" weightage="20" keywordseo="HDFC">HDFC</keyword>, which gives out a fifth of the country’s <keyword id="35519" type="PERSON" weightage="20" keywordseo="home-loans">home loans</keyword>, says that its average size of loan has gone up to ₹30 lakh from ₹28 lakh in the last one year. At a time when property prices are falling (or stable at best) on an average, this could only mean that Indians are going in for bigger homes. “Homes are a lot more affordable now as income levels have gone up but home loan prices have either remained stagnant or come down. Interest rates are at an all-time now,” <keyword id="6419588" type="UNKNOWN" weightage="20" keywordseo="Keki-Mistry">Keki Mistry</keyword>, CEO of HDFC told Business Insider India. Yet another study by Bankbazaar too said that in 2020, average home loan sizes in all went up to ₹26.4 lakhs from ₹23.8 lakhs the year before. The loans taken out by women was a tad higher at ₹31 lakhs. <div type="Video" msid="80726505" hostid="261" title="The CEO of India's largest home loan company is happy because people are back to buying homes⁠— and bigger ones" dataSource="BUSINESSINSIDER" thumbUrl="https://denmark.timesinternet.in/cmslite/api/app/images.jpg?msid=80726505"></div> ‘All of us are one-room short’ The reason could be the yearning of space as families stayed locked in with more than two people working from home, on an average. “Today stars are aligned for realistic activity in work from home. All of us here are one room short of our houses. I'm staying in a four bedroom house. I want a fifth bedroom so that I can do my work properly,” said Nilesh Shah, MD of Kotak Mahindra Asset Management Company. Shah too mirrored Mistry’s sentiment saying that real estate prices have either stagnated since 2016 or come down. “The affordability index has come down from 50 to now about 28,” said Shah. Lower prices and lower interest rates coupled with good inventory could mean property buyers are now choosing to go for larger properties which now fit into their budgets. The falling average age of home buyers might also have had an effect on the choice for bigger homes. Younger people tend to prefer larger homes while older buyers prefer compact houses, and the young population of India might also aspire for larger homes going ahead. “The average age of home buyers is now at around 37-38 years now. Considering that two-thirds of the population is under 40, younger people will buy homes in the next 5-10 years,” said Mistry. If the work from home trend is here to stay, it might also be possible that the demand for spacious homes is here to stay. SEE ALSO: <a href="https://www.businessinsider.in/business/ecommerce/news/why-grofers-may-allow-an-american-blank-cheque-firm-to-buy-it-out-instead-of-fighting-ambani-and-bigbasket-for-ipo/articleshow/80874979.cms">Here’s why Grofers may allow an American “blank cheque” firm to buy it out instead of fighting Ambani and BigBasket for IPO</a> <a href="https://www.businessinsider.in/india/news/spicejet-and-indigo-stocks-take-off-as-a-2-hour-flight-could-now-cost-up-to-13000/articleshow/80873865.cms">SpiceJet and IndiGo stocks take off as a 2-hour flight could now cost up to ₹13,000</a> <a href="https://www.businessinsider.in/business/auto/news/centre-earned-100-crores-by-sharing-vehicle-registration-data-with-companies-such-as-bmw-axis-bank-bajaj-allianz-lt-and-others/articleshow/80879638.cms">Centre earned ₹100 crores by sharing vehicle registration data with companies such as BMW, Axis Bank, Bajaj Allianz, L&amp;T and others</a>

WATCH: The CEO of India’s largest home loan company says people are going for bigger homes, thanks to the lockdown

<ul><li>More than ₹1.2 lakh crore may have been collected in January, compared to ₹1.15 lakh crore in December 2020, which itself was an all-time high.</li><li>The government's total collection from <keyword id="6359833" type="UNKNOWN" weightage="20" keywordseo="Goods-and-services-tax">goods and services tax</keyword> (GST) may now be short of its target by just ₹11,000 crore.</li><li>This is significant for it shows the recovery in economic activity as well as eases the fear of a cash crunch ahead of the upcoming Budget. </li></ul>More than ₹1.2 lakh crore may have been collected in January, compared to ₹1.15 lakh crore in December 2020, which itself was an all-time high, according to the Ecowrap report report put out by the State Bank of India. This is significant for two reasons: it shows a stronger-than-expected recovery in the economy and eases the fear of a cash crunch ahead of the upcoming Budget. The government's total collection from goods and services tax (GST) may now be short of its target by just ₹11,000 crore. <div type="image" title="GST Collections 2021." msid="80513159" hostid="261" caption="&amp;lt;p&amp;gt;Source: SBI Ecowrap Report&amp;lt;/p&amp;gt;"></div> This is significant for it shows the recovery in economic activity as well as eases the fear of a cash crunch ahead of the upcoming Budget. "Government surplus cash balances have increased significantly recently. The number has increased to ₹3.34 lakh crore as on Jan 28, 2021 compared to ₹1.08 lakh crore in Sep 2020," the report added. This can reduce the amount of money the government needs to borrow, and therefore, curb the need for higher interest rates, all of which will contribute to the economic recovery, SK Ghosh, the Chief Economist at the country's largest bank said. This will be music to <keyword id="6355261" type="UNKNOWN" weightage="20" keywordseo="finance-minister">Finance Minister</keyword> <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword>'s ears. This further bolsters the bulls who have took the Sensex to a new record before it cooled off. In an interview with Business Insider, Nilesh Shah, MD of Kotak Mahindra Asset Management Fund⁠— also a part-time member of the Prime Minister’s Economic Advisory Council⁠⁠— cited the spike in GST collections ⁠in December, aside from data from the <a href="https://www.gstatic.com/covid19/mobility/2021-01-12_IN_Mobility_Report_en-GB.pdf">Google </a>mobility index and the RBI’s <a href="https://economictimes.indiatimes.com/markets/forex/forex-reserves-up-by-758-mn-to-lifetime-high-of-586-082-bn/articleshow/80289432.cms">foreign exchange reserves</a> to show that the Indian economy is recovering fast. “Put all of this data together, we are seeing a month-on-month improvement in the economy,” Shah explained. <div type="Youtube" id="v02oeojB4Jk" title="The 'mother of all bull runs' explained using Amitabh Bachchan's blockbuster Amar Akbar Anthony" thumbUrl="https://i.ytimg.com/vi/v02oeojB4Jk/mqdefault.jpg"></div> Industrialist Kumar Mangalam Birla too in a <a href="https://www.businessinsider.in/budget/news/kumar-mangalam-birla-says-markets-are-too-euphoric-and-the-economists-are-too-pessimistic/articleshow/80367439.cms">recent note on LinkedIn</a> too pointed out the “swiftness with which we have seen recovery play out across sectors" and Aditi Nayar, economist at ICRA, said that the recession in India will end latest by March 2021. <div type="twitter" handle="BiIndia" handlename="Business Insider India🇮🇳" image="http://pbs.twimg.com/profile_images/1232926719016718336/sfffJHNV_normal.jpg" favoritecount="10" retweetcount="2" status="#BudgetInsider | &quot;Economic metrics indicate that India will be out of the recession by March 2021.&quot;: @ICRALimited's… https://t.co/yutrKaxSt1" createdat="1611238345000" id="1352257747866189829"></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/niti-aayog-public-policy-specialist-cites-budget-2021-priorities-for-education-health-food-and-nutrition/articleshow/80476928.cms">From food coupons to a fund to provide laptops and tablets to the poor⁠— NITI Aayog’s public policy analyst has a wishlist too</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/telecom/news/simply-put-airtel-says-all-it-now-needs-is-spectrum-to-deliver-5g-services-at-a-speed-of-up-to-900-mbps/articleshow/80511946.cms">Simply put, Airtel says all it now needs is spectrum to deliver 5G services at a speed of up to 900 Mbps</a><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/telecom/news/simply-put-airtel-says-all-it-now-needs-is-spectrum-to-deliver-5g-services-at-a-speed-of-up-to-900-mbps/articleshow/80511946.cms"></a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/prime-minister-narendra-modi-signals-big-defence-budget-allocation-for-make-in-india/articleshow/80511082.cms">India’s Prime Minister Narendra Modi may just have signalled a big allocation for defence equipment manufacturing, 3 days before the budget</a><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/prime-minister-narendra-modi-signals-big-defence-budget-allocation-for-make-in-india/articleshow/80511082.cms"></a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/india-needs-to-add-massive-amount-of-solar-and-wind-power-capacity-this-year-to-meet-its-first-target/articleshow/80496138.cms">India needs to add massive amount of solar and wind power capacity this year to meet its first target</a>

Glee.S.T! January 2021 GST collection may have beat the December record

<ul><li>One of India’s biggest billionaires, referring to the bull run in the markets, said "economists are now searching for alphabets that will adequately describe this trend of cautious optimism."</li><li>The Reserve Bank of India in its financial stability report pointed out that the ‘disconnect’ between India’s <keyword id="6357440" type="DEFINITION" weightage="20" keywordseo="Stock-Market">stock market</keyword> and economy definitely poses risks to financial stability.</li><li><keyword id="39439" type="COMPANY" weightage="20" keywordseo="birla">Birla</keyword> said that several indicators like GST collections, electricity demand, railway freight movement and passenger vehicle sales have shown positive growth numbers in the recent months.</li></ul><keyword id="6354955" type="UNKNOWN" weightage="20" keywordseo="Kumar-Mangalam-Birla">Kumar Mangalam Birla</keyword>, one of India’s biggest business leaders and the owner of the over $48 billion <keyword id="44373" type="CITY" weightage="20" keywordseo="Aditya-Birla-Group">Aditya Birla Group</keyword>, has an interesting take on how the recovery in the Indian economy is being perceived: markets are euphoric and economists are pessimistic, in Birla’s view. The musings, coming from one of the country’s biggest industrialists, are significant coming ahead of India’s annual budget on February 1. The state of the economy, which will be reflected in the annual economic survey a day before the budget speech, will have a bearing on Finance Minister Nirmala Sitharaman’s approach and the policy announcements she makes for the coming year. <cmsannotation type="cmsannotation" annotationid="So, what does Birla have to say about the economy?" comment="subhead" text="So, what does Birla have to say about the economy?">So, what does Birla have to say about the economy?</cmsannotation> In his latest note posted on LinkedIn, Birla shared the same fear that even the Reserve Bank of India (RBI) has. The RBI, in its latest financial stability report, pointed out that In India, while the economy has been called out as “<a href="https://www.thehindu.com/business/Economy/indian-economy-weak-credit-growth-bottoming-out-bofa/article33583665.ece">weak</a>”, the stock markets have rallied to an all-time high. However, Birla is more optimistic than the economists at RBI, or elsewhere. “In India too, the initial prognosis and narrative of experts proved to be excessively pessimistic,” he wrote. “The economists, I am told, are now searching for alphabets that will adequately describe this trend of cautious optimism,” Birla, whose companies include Ultratech (the country’s biggest cement maker), Hindalco (the country’s biggest aluminium company) and overseas units like Novelis, added. <div type="image" title="Sensex Nifty 2020." msid="80367607" hostid="261"></div> Responding to Birla’s comments, Mahesh Vyas, an eminent economist leading the Centre for Monitoring Indian Economy (CMIE), a think tank, said, “Economists are pessimistic. Economists are worrying about the economy. We are always hopeful in this pessimism, we keep looking for and sometimes finding green shoots. Currently, the search for that green shoot is really the most difficult one.” “One can say, since we have seen a decline this financial year, the next financial year we will see an increase which will be good but on a net basis, it’s difficult for me to see that in the next year we will have entirely covered the lost ground. We should look beyond the GDP to see the concerns the economists are talking about,” Vyas told Business Insider, in a chat where he raised an alarm around high unemployment in India. <div type="twitter" handle="BiIndia" handlename="Business Insider India🇮🇳" image="http://pbs.twimg.com/profile_images/1232926719016718336/sfffJHNV_normal.jpg" favoritecount="11" retweetcount="8" status="#Budgetnsider | What can the budget do to reduce unemployment in India? https://t.co/XkcVX5AEbn" createdat="1611138439000" id="1351838713857208322"></div> This is not the first time that Birla has sounded more excited about the recovery, especially in sectors, like cement, aluminium, where he is a major player. “There was a big question around what would happen to infrastructure spending. If I just see aluminium and cement businesses, they’ve both come back to pre-COVID levels very quickly,” he said during a candid conversation at<a href="https://www.businessinsider.in/business/corporates/news/kumar-mangalam-birla-says-cement-industry-is-recovering-and-analysts-find-evidence-of-it-outside-ultratech-too/articleshow/78791281.cms"> BI Global Trends Festival 2020</a>. <div type="Youtube" id="v02oeojB4Jk" title="One Of India&amp;#39;s Money Managers Explained ‘The Mother Of All Bull Runs’ Using Amar, Akbar, Anthony" thumbUrl="https://i.ytimg.com/vi/v02oeojB4Jk/mqdefault.jpg"></div> There is indeed a lot of divided opinion on the nature of India’s economic recovery since the pandemic broke out. Noted economist <a href="https://www.livemint.com/news/india/indian-economy-may-contract-25-in-current-fiscal-economist-arun-kumar-11610873398297.html">Arun Kumar</a> too had said that India’s economy is not really recovering as fast as the government claims. Instead, the economy may contract by 25% in the current fiscal year. On the other hand, market experts like Nilesh Shah, MD of Kotak Mahindra Asset Management Fund⁠— also a part-time member of the Prime Minister’s Economic Advisory Council⁠— is more optimistic. In an interview with Business Insider, Shah cited the spike in GST collections ⁠— <a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1685332">a record high in December</a> ⁠— aside from data from the <a href="https://www.gstatic.com/covid19/mobility/2021-01-12_IN_Mobility_Report_en-GB.pdf">Google </a>mobility index and the Reserve Bank of India’s <a href="https://economictimes.indiatimes.com/markets/forex/forex-reserves-up-by-758-mn-to-lifetime-high-of-586-082-bn/articleshow/80289432.cms">foreign exchange reserves</a> to show that all is relatively well. “Put all of this data together, we are seeing a month-on-month improvement in the economy,” Shah explained. Ahead of the upcoming budget, on February 1, when Finance Minister Nirmala Sitharaman is expected to announce measures to further bolster the economic recovery, the debate is just gaining momentum. The sustainability of India’s economic recovery⁠— or that of the market rally⁠— will be clear in the months to come. As Birla himself put it in his latest post, “it will take another quarter or so to see whether this bull run would last.” SEE ALSO: <a href="https://www.businessinsider.in/budget/news/here-are-the-major-changes-that-could-reportedly-come-up-with-the-union-budget-2021-by-nirmala-sitharaman/articleshow/80325146.cms">Budget 2021: From Income Tax deductions to creating jobs and boosting healthcare – Here’s all that could be in Nirmala Sitharaman’s fiscal plans</a>

Kumar Mangalam Birla says markets are too euphoric and the economists are too pessimistic

The bloodbath seen at Dalal Street and markets across the globe has been driven by the fear of <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">coronavirus</keyword> and bearish sentiments may only get changed once there is comfort in the markets that the deadly virus will be cured, Nilesh Shah, MD, Kotak Mahindra Asset Management Company has said. In last 30 days barring Chinese markets, most of the global markets have fallen between 10-30 per cent spooked by the coronavirus spread. The fall across the world is as sharp as 2008 which was a financial crisis. <keyword id="55718" type="PERSON" weightage="20" keywordseo="Dow-Jones">Dow jones</keyword> has moved from all time high to 20 per cent correction, a bear zone in just about 19 working days. It's the fastest ever in their history. Dalal Street has also been on a free fall for past few days with both Nifty50 on the <keyword id="53581" type="COMPANY" weightage="20" keywordseo="NATIONAL-STOCK-EXCHANGE">National Stock Exchange</keyword> and the <keyword id="53232" type="COMPANY" weightage="20" keywordseo="BSE-sensex">BSE Sensex</keyword> hitting their lower circuit in early morning trade on Friday resulting in trading to be halted for the next 45 minutes. According to Shah unless a medical solution emerges, there is less likelihood of markets to settle down. "Lower oil prices, lower interest rates, higher liquidity and lower trade deficit with China will not be discounted by the market till such time there is a medical solution for coronavirus," he said in a Concall over present developments. He said that for India, the fundamentals have not yet deteriorated as much as China, Italy or Iran, but the markets are pricing that India will not be able to contain coronavirus scare. "Rightly or wrongly this perception is pushing Foreign Portfolio Investor's to sell their Indian holdings. The persistent and intense selling by FPIs is resulting into sharp drop in prices. Hopefully, we will able to change that perception by containing coronavirus like we contained Nipah virus in Kerala some time back," Shah said putting hope on India's hot and humid climate to help change the perception faster. In China, through lockdown and aggressive quarantine, coronavirus spread has largely been contained in a reasonable period of time. Today, China seems to be recovering and their market is marginally positive over last 30 days compared to world markets which are down 20 per cent. Shah said that medical solution for coronavirus was important as Indian markets are not discounting some facts that indicates that all is not as bad as is being perceived. "In October 2008 at the peak of subprime crisis our Market Cap bottomed at $ 510 billion. Our market cap to GDP ratio was 43 per cent at that point of time. Currently, our market cap is $ 1.68 trillion. Our market cap to GDP ratio is 56 per cent. From Market cap to GDP ratio we are becoming cheaper," Shah said. On the oil front, crude prices have come down from $ 68 per barrel to $ 35 p er barrel. Every drop of a dollar in Oil prices benefits India by $ 1.4 bill ion. If oil prices persist at this price level than India will benefit by $ 4 6 billion. Moreover, the current situation will also help to reduce country's trade deficit with China. India's trade deficit with China is about $70 billion, including routing from other countries and havala payment. (Officially - $58 billion). Shah said that India could save $10-12 billion as Chinese exports will be impacted due to coronavirus scare. Another positive on the present developments is that Central banks around the world are cutting interest rates and pumping liquidity. The US Fed cut rates by 33 per cent or 50 bps on a base of 1.58 per cent. Bank of England cut rates by 66 per cent or 50 bps on a base of 0.75 per cent. There is expectation in the market that the RBI will also lower interest rates to support growth that should boost investment and growth. The current situation also presents India with an opportunity to attract larger investment. "There is likelihood of shift of manufacturing from China to other countries as the firms start diversifying their supply chain. India can welcome those companies to become part of global supply chain. This can support India's growth for years to come," Shah said in his note. SEE ALSO: <a href="https://www.businessinsider.in/topic/coronavirus">coronavirus: Latest News, Articles on coronavirus | Business Insider India</a> <a href="https://www.businessinsider.in/science/health/news/what-is-the-meaning-of-pandemic-epidemic-outbreak/articleshow/74587579.cms">What is the meaning of pandemic and how is it different from an epidemic or an outbreak</a> <a href="https://www.businessinsider.in/india/news/coronavirus-travel-ban-india-on-lockdown-till-april-15/articleshow/74586131.cms">Coronavirus travel ban: India on lockdown till April 15</a>

Stock markets will stop bleeding after Corona cure emerges say experts

New Delhi, Feb 1 () Investor wealth plummeted by Rs 3.46 lakh crore on Saturday as equity markets came crashing after the Union Budget for 2020-21 failed to live up to expectations.
 The massive sell-off in equity market wiped out investor wealth, which fell by Rs 3,46,256.76 crore to Rs 1,53,04,724.97 crore on the BSE.
 Market capitalisation of BSE-listed firms plunged as BSE Sensex plummeted 987.96 points to close below the key 40,000-mark. It closed at 39,735.53.
 This was the benchmark's biggest drop since October 24, 2008, when it had plummeted 1,070.63 points, and the fourth biggest fall overall.
 "The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes. Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seems to be negative for the equity market," Anand Rathi Shares &amp; Stock Brokers Chief Economist and Executive Director Sujan Hajra said.
 Motilal Oswal Financial Services Managing Director &amp; CEO Motilal Oswal said, "Markets have taken a cautious view on the Budget, the tax rate cut and DDT (Dividend Distribution Tax) benefit will help economy to grow and corporate payouts to increase. At these levels one should buy for long term."
 The government on Saturday proposed to remove DDT on companies, and henceforth the tax will be shifted to recipients at the applicable rate.
 Currently, companies are required to pay DDT on the dividend paid to shareholders at the rate of 15 per cent plus applicable surcharge and cess, in addition to the tax payable by the company on its profits.
 "The budget is good on intent. However, the key is efficient execution in a time-bound manner. There are many positives to simplify things and encourage entrepreneurs but again, key will be execution in a time-bound manner. Intent needs to be converted into implementation," Nilesh Shah, MD &amp; CEO, Kotak Mahindra Asset Management Company said.
 The finance minister said that improvement in revenue generation gives hopes of lowering fiscal deficit to 3.5 per cent of GDP in the next fiscal from 3.8 per cent in the current.
 From the 30-share pack on BSE, 24 companies suffered losses, led by ITC, Larsen &amp; Toubro, HDFC and State Bank of India.
 According to Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services, investors are disappointed with no relief on long term capital gains (LTCG) tax and lack of big bang sectoral stimulus.
 "The removal of Dividend Distribution Tax seen as a continuation of earlier step of reducing corporate tax is well appreciated and sends the right signals to local and global investors," he added.
 At the BSE, 1,724 scrips declined, while 611 advanced and 126 remained unchanged.
 In the broader market, the BSE SmallCap index fell 2.20 per cent, while BSE MidCap index declined 2.21 per cent.
 "The markets have reacted negatively to the Budget, mainly due to some disappointments on account of non-abolition of LTCG, confusion about the impact of DDT removal and taxing dividends in the hands of recipients. Also the alternative provided to individuals for lower rate of tax, provided they do not claim exemptions/deductions, did not seem too attractive," HDFC Securities MD &amp; CEO Dhiraj Relli said.
 "The alternative tax system discourages investments which market participants do not seem to be comfortable with. The overhang of coronavirus outbreak on our markets also got magnified in the later half of the session. Foreign investors will look for signs of revival of growth before they commit funds," he said. SUM 
RVK

Investor wealth erodes by Rs 3.46 lakh cr as mkts plummet after Budget announcement

New Delhi, Apr 27 () Experts on Monday termed the RBI's move to open a special liquidity facility of Rs 50,000 crore for the mutual fund sector as "brilliant", saying it will improve investor confidence and reduce stress in the corporate debt market. The Reserve Bank of India's decision comes days after Franklin Templeton Mutual Fund decided to close six debt schemes with assets under management of more than Rs 25,000 crore. With a view to easing liquidity pressures on mutual funds, the RBI decided to open a special liquidity facility of Rs 50,000 crore. At the same time, the RBI highlighted that the stress, however, is confined to the high-risk debt mutual fund (MF) segment at this stage; the larger industry remains liquid. Mutual fund industry body Amfi Chairman Nilesh Shah said it is a good confidence building measure to ensure continued confidence of investors on the industry as also normal functioning of the markets. Nimesh Shah, MD and CEO at ICICI Prudential AMC, said that as a pre-emptive step, the RBI through its announcement of special liquidity facility for mutual funds has aimed to reduce the stress in the corporate bond segment. "...This is a welcome and positive step which will improve investor sentiments. We believe that a deflationary environment where prices come down across asset classes makes debt an interesting asset class to invest in today," he added. Given the incident about winding up of six debt oriented schemes of Franklin Templeton MF, there was much anxiousness and concern among investors, specially retail clients. "Brilliant move by RBI to bring confidence to mutual fund investors and also will help to calm down the corporate debt market," ITI Mutual Fund CEO and CIO George Heber Joseph said. Ankur Maheshwari, CEO, Equirus Wealth, said the RBI's decision will provide comfort to mutual fund investors and preserve financial stability. "Also, while banks had sufficient liquidity already, this is a reassuring step that the regulator is ready to support the markets as and when required," he added. Under the Special Liquidity Facility for Mutual Funds (SLF-MF), the RBI will conduct repo operations of 90 days tenor at the fixed repo rate. The scheme will be available from Monday itself till May 11, 2020, or up to utilisation of the allocated amount, whichever is earlier. The RBI further said funds availed under the SLF-MF should be used by banks exclusively for meeting the liquidity requirements of MFs by extending loans, and undertaking outright purchase of and/or repos against the collateral of investment grade corporate bonds, commercial papers, debentures and certificates of deposit held by MFs. "We would need to understand the definition of investment grade debt instruments. Good quality debt instruments were already getting funding, therefore what all grades of debt instruments are included will determine the actual impact on liquidity into MF system," said Omkeshwar Singh, who is head RankMF at Samco. Kaustubh Belapurkar, Director – Manager Research, Morningstar India said the liquidity window will certainly help improve investor confidence. Mutual funds have ample AAA rated exposures which can be used for this purpose. "But it will be interesting to see, if banks are willing to lend lower down the credit curve if it comes to that. Liquidity is constrained in the debt markets,especially lower down the credit spectrum," he added. He, further, said that debt funds have witnessed redemptions, but most have a significant amount of liquid securities to meet redemptions. This has been in play since March, given the pessimism around the economy slowing down due to the lockdown. Amit Jain, Co-Founder and CEO Ashika Wealth Advisors said liquidity window is a positive sentiment in short term, however in the long run, performance of underlying industry and business model will determine the future liquidity in corporate bond market "Also, we feel, once the lockdown opens we may observe high redemption pressure by Indian corporates from these debt instruments, to fund their day to day operations," he added. The announcement comes days after Franklin Templeton Mutual Fund, which has been operating in India for 25 years, decided to shut down its six schemes citing redemption pressures and lack of liquidity in the bond markets. The Amfi chairman believes that the mutual fund industry continues to be on sound footing both on portfolio quality as also on the liquidity front despite an isolated incident in these challenging times. Barring four fund houses that have collectively taken loan of Rs 4,427.68 crore, as of April 23, 2020, which is a small percentage of the RBI announcement and also overall MF Industry AUMs, none of the other 40 mutual fund houses has any borrowings, thereby indicating sound liquidity, he added. SP MR

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