Mutual fund CEOs on hits and misses of Budget 2021

From push to the financial sector to the healthcare budget, top mutual fund CEOs speak about the hits and misses of the budget 2021 presented by Finance Minister, Nirmala Sitharaman.

Prathit Bhobe, CEO & MD, Tata Mutual Fund

In the run up to the budget market was bracing for higher taxes on the back of a pandemic year. The fact that there were no changes in taxes coupled with a boost for growth made it double joy for equity markets. DDT on Reit and INveit is a positive step. This will further increase attractiveness and will also deepen the category. The measure to set up a body to buy bonds upto investment grade is a good step to help deepen and market making in Corporate bond market. It is a very positive step for MFs.

Markets usually develop anxiety on tax increase or any double taxation around budget time. No changes in tax is a big relief for equity markets. Total gross borrowing will be nearly 12 lakh crore and after repayment of nearly 2.8 lakh crore the net borrowing would be 9.2 Lakh crore. This number is much higher than what was envisaged at around 8 lakh crore. It could be a busy year on bond issuances and will put upward pressure on bond yields.

Tax exemption for investment division for foreign banks is a step in the right direction to creating an vibrant ecosystem. Setting up of AIF for disposal of stressed assets is an excellent move. Funds which are focused in running special situations will benefit from such opportunities.

Radhika Gupta is the MD & CEO of Edelweiss Asset Management Limited

We as a country went through extraordinary times, and this was very much a budget for those times. An increase in capex expenditure, and focus on infrastructure across the board, is a big positive. At the same time, a key focus on disinvestment – specific plans around monetization of various assets, reducing the number of CPSEs to only strategic ones, and an asset monetization dashboard – is very clear. The creation of a bad bank, through asset management platforms, if executed well, is a very good idea. I personally found some capital market reforms heartening – a consolidation of various securities markets acts into a single one, a focus on investor protection across financial products, tightening deposit insurance, and dividend incentives for FPIs.

On the fiscal side, while next year’s number was in line with expectations, it was good to see a clear glide path through 2025 on fiscal consolidation. These are times that call for a prioritization of growth in the short term, and the budget delivered that, without imposing any additional cess or increasing direct taxes. Overall, we heard all the right things, and at the right time, as the economy starts to bounce back. If we can execute on the promises, there are reasons to be very optimistic.

Vishal Kapoor, CEO, IDFC AMC

Budget 2021 seems to have a done a remarkable job in being simple and effective. It makes a strong push for growth with a sharp increase in capital expenditure, especially in infrastructure. Additional resource required are targeted to be raised through divestment and monetization, and domestic corporate and MSMEs would be happy to see additional custom duties in certain sectors, with no increase in taxes for them. Individual tax payers would be relieved that there have been no change in Income tax rates, given the pre-budget concern of a possible Covid cess or higher capital gains or wealth tax imposition. Additionally tax filing simplification for investors through pre-filled capital gains and interest income, relief for senior citizens in filing taxes and a reduction in the limit for tax assessment reopening from 6 years to 3 years will improve tax-payer confidence. Retail investors will also look forward to the benefit from regulatory consolidation and the Investor Charter announced.

Ashutosh Bishnoi, MD & CEO, Mahindra Manulife Mutual Fund

We welcome the extraordinary support this budget provides for the Infra sector with targeted investments through Invits and through streamlining of the management of stressed assets. We expect significant opportunities for investors operating in Infra sector. The introduction of the zero coupon bonds is also a welcome move that will help to support the sector.

We welcome move for greater support to the BFSI sector where we see greater opportunities for investors in the insurance, PSB and Asset Reconstruction sectors. The government aims to complete disinvestment from more public assets, which will lead to higher free float in equity markets and thereby wider market participation.

We look forward to new dispensation for the regulation of Gold Exchanges. We look forward to investors unlocking their wealth in Gold, so that their investments could provide them market related returns. We look forward to the streamlining of the securities market laws. We hope this will result in lowering the burden of compliance for the small investors.