STT hike on F&Os in Budget targeted at high-frequency traders: Nilesh Shah of Kotak AMC
Can India achieve the government's target of achieving $10 trillion GDP by 2030? Given that we are yet to hit $4 trillion, only $8 trillion is plausible by 2030, says Nilesh Shah, MD, Kotak AMC, in a post-Budget interaction with Mint. He believes finance minister Nirmala Sitharaman achieved the trinity of impossible of fiscal consolidation, investment and job creation. It should lead to the country's credit upgrade, he says. Shah adds that hiking the security transaction tax (STT) on futures and options (F&Os) is a step in the right direction. Edited excerpts:
The government's focus on fiscal consolidation was one of the good things about the Budget. India is among the few countries in the world whose primary deficit (fiscal deficit- interest payment) is 1.5%. The government is committed to bringing it down to 0.5%-0% by 2028. What it means is the government will be spending within its means and it will not crowd out private borrowers. This should result in credit rating upgrade of India, paving the way for a significant reduction in the cost of capital for private businesses. Entrepreneurs will have enough capital to make investments to run their businesses.
On the capital expenditure front, the government is focussed on not just road and railways but also power. India may face power shortage over the next two year because power plants are running at maximum utilisation. Power demand is growing in double digits while supply in a single digit. We have no option but to invest in creating more capacity. Finally we are investing in nuclear power, which is great.
Moreover, the focus is back on employment generation. Apart from skill-development schemes, incentives are being given for recruitment. It the country can create
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