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00:00Welcome and you're watching a budget special coverage on NDTV Profit.
00:24You might miss Alex because it's the editor's cut, but I'm fronting it and with me and four
00:30of my colleagues, we are going to try and tell you what the editor's take on this budget
00:35is.
00:36This is the top editorial team of NDTV Profit.
00:40With me to my left, Sajid Mangat, to my right, Tamanna, Samina and Muralidhar Swaminathan.
00:45Okay guys, let's try and set the basics of what stood out in this budget.
00:51Murali, you've had the most time off air, so let me start off with you.
00:56What did you make?
00:57What is the key takeaway for you?
00:59Okay, so the most important takeaway is not about tax, it's not about capital gains tax,
01:04it's about the five-year roadmap.
01:06Very clearly, that is what the agenda is.
01:08We should not look at it from what's going to happen now to your capital gains tax or
01:13real estate capital gains or income tax, of course there are benefits, but look at what
01:18is set for the next five years.
01:21That's what we need to look at, and that is where I think maybe the market is recognizing
01:24that, so you will be able to elaborate in the course of the conversation.
01:28Three things stood out for me, one, very clearly, the agenda to create jobs.
01:34That's the top priority, not just now, over the next few years.
01:39Once you focus on creating jobs, your consumption will continue to grow.
01:45So in any case, we are going to be a consumption-led growth.
01:48And the message here is very clear, the capex has not been increased from 11.1 lakh crore,
01:54that's not been increased.
01:55All the focus is on jobs.
01:57The other focus is on welfare schemes, sorry, as far as jobs are concerned, there is a shift
02:03in strategy.
02:04In the past, you will say that I'll build a road, I'll create jobs.
02:06Now it's different.
02:07You are giving incentives to employers.
02:10Perhaps I think in recent years, you, Sajid, might allude to this, we have never heard
02:15of incentives to employers for job creation.
02:18So that's a big shift.
02:19And then the welfare schemes that are being evolved are based on asset generation model.
02:25So these two things will help sustain the growth.
02:28For us, sustaining growth is going to be important.
02:30All the other things will follow later.
02:32Okay.
02:33Now, we'll make this freewheeling, so everybody can come in whenever they want.
02:35But okay, Samina, to you, what stood out for you?
02:37I think this is the very first time, Neeraj, the economic survey was rightfully reflected
02:42in the budget.
02:43So this is two different tales in so many words.
02:47Fiscal consolidation, the fact that they're going to be disciplined about this and do
02:51better than what they initially promised is a huge positive.
02:54Apart from that, I think the fact that they've kept the CAPEX number unchanged, it's a direct
02:58message to the private sector saying, it's now your time to do your job.
03:02We've done what we had to.
03:04It's now time that you play ball.
03:06And I think that stands out.
03:07So while employment is very, very important, the onus will be back on the private sector
03:11to do what's needed most, which is CAPEX, hire more people, build the manufacturing.
03:16And I think one last one is the commitment to simplify the tax code.
03:20Again, a big standout, because if you've got to draw an FDI, we have to have a simple tax
03:25code.
03:26While the rates could have been tinkered with, simplification is a key positive.
03:30Yeah.
03:31And I think in some sense, one good thing was that we know that the top 30 or the top
03:36100 or 200 firms are doing the CAPEX, which they have, green energy, etc.
03:41The bottom rung, the MSMEs are not.
03:43And in some sense, this ability to tell smaller companies that we are giving you incentives
03:48for employment, so on and so forth.
03:51Let's see if that brings about some bit of capacity buildup or CAPEX at that end, because
03:57that has thus far clearly been missing.
04:00Tamanna, your take.
04:01Sorry.
04:02That's exactly the point, right?
04:03The capacity building or the job growth is going to come in from the MSMEs and the mid-cap
04:11kind of company and not from the top companies here.
04:13Now, the question is that whether they have that incentive to pick up that CAPEX and go
04:19ahead.
04:20Do they have the capital to do that?
04:22That's the thing which we need to see now.
04:24Also, just to add to that list, even GIFCITY, we didn't talk about this very much, but GIFCITY
04:28has been very significant to the government in order to bring all that foreign money in
04:32and localize everything.
04:33So creating jobs, pushing for growth, that could be an impetus for GIFCITY to go out
04:37there and hire people and expand that offering that is there.
04:41And there are points around the foreign companies as well, and we'll get to that, but Tamanna,
04:45the tax changes, but your initial take, Tamanna.
04:47Okay.
04:48So I would say, and a bit of taking this opportunity to crow a bit about NDTV Profits coverage,
04:53but if you had watched us in the run-up to the budget, a lot of what our experts said,
04:59a lot of what we said has come on those lines.
05:02And why am I saying that?
05:03So Manish Sabharwal, for example, when we talk about employment, and that's one of the
05:08foremost voices, comes and says that if you want to really create jobs, don't focus on
05:12those looking for jobs, focus on those giving the jobs.
05:15And if you look at what they've done in this budget, I will incentivize you to hire more
05:19people.
05:20I will give you a subsidy on their PF.
05:23Okay, you have to hire interns for 12 months, pay 10% out of your CSR.
05:30I'm making it easier for you to give jobs.
05:33The other thing that we said, that any tax relief will come on the new tax regime.
05:38This Section 80C dreams we should forget about.
05:41And that's exactly what has happened.
05:43We also said that there will not be populist measures towards the rural economy as is being
05:48expected.
05:49And look at what they've talked about.
05:50They've talked about incentivizing farmers to have climate-resistant crops, more R&D,
05:55et cetera.
05:56No huge outlays like were expected.
05:59I think the joker in the pack really, and which was something that we'd also said was
06:04on capital gains tax.
06:05The long-term capital gains tax is going to pinch.
06:10The exact impact of it will be known in the next couple of days, whether it's on, you
06:15know, fixed assets like real estate, gold.
06:17The markets, in my view, will be fine.
06:21They will get a bit of a hit initially, but they learn to live with it because people
06:25have made money.
06:26So if you have to pay a little more in terms of tax, it's okay.
06:31It's something that will be swallowed and tolerated.
06:33On the capital gains front, my view is that the promoters who are coming out with IPOs
06:41are not going to put in their shares in the IPOs now.
06:44They will wait for the stock to list before they exit the stock.
06:49Because the fact is that the indexation, the grandfathering which was available for unlisted
06:53stocks have been removed.
06:55So basically what happened in 2018 was that there was a grandfathering on the price at
07:00that point in time.
07:01And many of the unlisted companies are using that as one of the clauses to get lower capital
07:07gains.
07:08Now that has been removed.
07:09It basically means that now they are taxed at full rate, which is 20% for the long-term
07:14and 30% for the long-term.
07:15So the private equity which has been aggressively selling out will now stay in?
07:20It will stay in till the…
07:22So that's actually a good thing, right?
07:24But then you have a lot of block deals and other stuff coming in because they will exit
07:27after listing.
07:28But Sajid, this was for 2018.
07:29So private equity which has come in post 2018 doesn't have this benefit effectively.
07:33Anyway, it should be.
07:34We are talking about promoters who own the equity in the company before 2018, not incentivized
07:38to do it.
07:39So maybe venture capitalists, right?
07:40Not even that much late stage private equity.
07:43A lot of companies now get listed after three years or four years of operations.
07:47So all of those don't.
07:48But Neeraj, it's the pre-IPO phase anyway is not counted here.
07:53Private equity still comes in three to four years anyway out before a listing, right?
07:58Exactly.
07:59Also, just to quantify that capital gains increase and Sunil Singhania said this and
08:02I think there is merit in it.
08:04He said first if you are gunning for 15% returns in your portfolio by increasing your capital
08:09gains from 10 to 12.5, the impact of that is 35 basis points on your returns.
08:14So now instead of saying I will stay invested till I make 15%, my goalpost is 15.35%.
08:20So of course, that's simplifying it too much.
08:22On short term also there is a bump up.
08:24Then that's the trader's money.
08:25Any which way.
08:26It's not sticky.
08:27I'll tell you my problem.
08:28Sorry, just one point here.
08:30I'll tell you the problem with this taxation.
08:33One, very simplistically 12.5 is not a rounded number.
08:37I think in the first year of the budget, they have not come out and said, okay, we are doing
08:43it X percent and Y percent.
08:45Now this is the tax for the next five years.
08:48It is open.
08:49As of now, no comment about whether this is the end of it.
08:52I think the market may in its wisdom believe that this is a start.
08:55We do not know where it will end.
08:58I mean for all the talk of tax and tariff predictability and continuity, this is the
09:06missing piece.
09:07I hope at some point of time in an interview, they clarify about whether this is it for
09:11the next five years or could there be more because you don't want uncertainty.
09:16Even if they have done this, it would have been great if they had come out and said,
09:19it's 12.5 and 20 and for the next four years, we don't foresee any increase.
09:22At least there is some predictability.
09:23In this case, that predictability about taxation regime on capital gains is missing.
09:29I wish that comes.
09:30To be fair, when the last time we tinkered on capital gains, we never said it's going
09:35to be there for five years.
09:36Yeah.
09:37So it was there.
09:38No government has to promise I won't tax you more.
09:39The reason why this time it's important, sorry, I'll just spend 30 seconds more here.
09:49The reason why this is important because now the market is in the wisdom might want to
09:52believe that they want parity between all asset classes.
09:56And equity taxation is still lower than some of the others.
09:59So will the market now fear that higher taxes around the corner, could it impact global
10:06investments?
10:07I would like to answer this question.
10:08I would like to answer this question.
10:09While there could be a fear, let's not forget that the markets were down 400 points when
10:16these announcements were coming through.
10:18We've gone home with a 30 point cut on the index, even though the breadth of the market
10:22was weak.
10:23We've taken it in our stride at least for today.
10:25No.
10:26So the 12.5% is that it's part of the rationalization because you were taxing capital gains on the
10:33basis of different asset classes, something for property, something for gold, something
10:37else for debt, that was done last year or the year before they rationalized that.
10:43So this is part of the rationalization that 12.5 is your bench.
10:48Now from there, like it's 12.5 for everything.
10:52Indexation is gone.
10:53So they have to rationalize that part and somewhere I think STT will also be kind of
10:59rationalized.
11:00So my question is on F&O, there was a huge scare.
11:04There was a huge scare.
11:05What has come is this STT tweak.
11:09My question is, is this just the beginning?
11:11Are they done with their attempts to curb the large volumes coming into quote unquote
11:19speculative trade?
11:20No.
11:21Consensus is no on this table?
11:22Consensus seems to be a no.
11:23Consensus, you know, the markets may be sharing STT today.
11:29The reason being that the finance minister hasn't converted gains from F&O as a speculative
11:35income and so it will be charged to your tax bracket.
11:38So not as bad as you would expect.
11:40Not as bad as expected.
11:41But that is still at the highest tax bracket in the US.
11:44No, it is not.
11:45Why speculative income?
11:47Is taxed at the highest tax bracket in the US?
11:49It's not being categorized, right?
11:50Trading from F&O is not being categorized.
11:51No, it's business income.
11:52It's business income.
11:53It's just categorized as business income, which is the highest tax bracket.
11:57One of the things which the market was expecting is an emphatic increase in the taxation rate.
12:03How can they do it?
12:04Or categorization, which was there.
12:06But the point is that if you look at the breakup of the turnover of STT, it's the proprietary
12:12traders who are the biggest traders in this market.
12:15Yeah, yeah.
12:16And the impact for them is hardly any in that sense.
12:19So no impact there.
12:20Because retail is not going to go away because just STT has gone up.
12:25There is hardly any.
12:26Fair call.
12:27Okay, now before I give my take, Sajid, your quick take.
12:29You know, my entire thing was that there should have been an increase in CapEx from 11.1 lakh
12:38crores because there was a fiscal room available for them to increase it.
12:42Unfortunately, we have taken that.
12:44But would that cover the cost of the glide path?
12:46The fiscal room was used to convince and take care of underprivileged in Bihar and Orissa.
12:49Can the economy not make…
12:51Bihar and Orissa has not been funded from the budget.
12:53It's multilateral loans which they are going to do it.
12:55So it's not the budget which is funded by it.
12:5715,000 crores.
12:58No, no, 15,000 crores is going to Andhra Pradesh from the budget.
13:02But that's a small number.
13:03Bihar flood relief.
13:04But that is to multilateral agencies.
13:06No, but all the expressway projects will come from the budget.
13:10All are part of the NHAI budget anyway.
13:12And rebuild the bridges which crashed.
13:15That's the tax buoyancy which is helping you, right?
13:18But Sajid, it comes at the offset of divestment receipts not coming in.
13:22STT collections were expected at 36,000 crores for this FY25.
13:26Where is the money, Sajid?
13:27The money is here, in STT.
13:29No, but that's not the point.
13:31Sajid, just a counter to your point though.
13:33There are 8 months left in this fiscal.
13:36Don't look at the percentage, but the absolute number of CAPEX announced in the interim budget was fairly high.
13:41You couldn't do anything because of HR Sahita.
13:43How will the economy absorb so much of capital in 8 months?
13:47I don't think the Indian economy is primed to absorb so much capital.
13:50How do you expect the private sector to step in now?
13:52The private sector is already doing it.
13:54It's not happening to that extent.
13:56Yeah, so at some point the private sector needs to do it because how long can the government do?
13:59It's debatable, but this is one point.
14:01What else is your top take?
14:02The other thing was the tax buoyancy.
14:05I think they have taken a very conservative approach with respect to tax revenue collection which is there.
14:10I believe that there is much more buoyancy there and that could have been used for…
14:16It's going to be conservative?
14:18It could be.
14:19You can say that, but then you can use it somewhere else.
14:23Maybe they will use it if the money comes in.
14:25Fair call.
14:26Just very quickly my take.
14:27One thing that stood out, I just like the fact that while the going is good,
14:32they have gone ahead and done a 4.9 number on the fiscal deficit
14:38because one doesn't know if the economy slows down,
14:42whether they have enough ammo to move from a 5.1 to 4.5 in FY26
14:46versus moving from 4.9 to 4.5 because remember when S&P changed its outlook,
14:52S&P mentioned that the state plus central should be 7.
14:55We know state is usually 3, 3.5, so the central needs to move to 4%.
15:00So they need to show that glide path.
15:02They have done it 4.9 admirably now.
15:04Go to 4.5 presumably and then side 4%.
15:07Let me give you the other side of that equation.
15:10If state plus center has to be 7, center is becoming more conservative
15:14because a lot of states will have to be spending ahead of two crucial elections,
15:19Maharashtra and Haryana and state governments are with the same party.
15:24So you have to give yourself some room.
15:28States will have to be spending all of your schemes to help farmers,
15:32a lot of that, ladla beti, ladla beta, all of that is coming on the state government's books
15:39and you have to make room for that.
15:41And two major reforms which you are missing is land and labor.
15:45Labor has yet to be notified.
15:47Both are state subjects but they are linking the land reforms to the central grants
15:53which is a very good thing because we saw that what happened to power sector.
15:58Means the discoms were not paying, were not getting the money and distribution companies,
16:04the first right of money went to them.
16:08And so if you are going to link your capex cycle to land reforms and labor reforms,
16:14there is a chance that in next three years you are going to achieve these things
16:19and digitization of land and a better data pool of labor is going to be a big asset going forward.
16:29Maybe off-budget items but who knows.
16:31Let's see.
16:32Anything else guys?
16:33I want to ask Neeraj a question.
16:35Two part questions.
16:37Why did the market fall initially, recover and close flat except for some sectors?
16:43Part number one.
16:45Part number two, how will the markets behave tomorrow when you go back,
16:48read the fine print, understand each sectors.
16:51So will the action be very sector specific and stock specific tomorrow?
16:55What is your take?
16:58So I made two or three phone calls after I got off air.
17:02The sense that, and it's a limited sense that people in the markets have,
17:06but the sense that I got is that the capital gains uptick was disappointing
17:11and there is an uncertainty there.
17:13Do we see a bit of a reaction in the days to come and not just tomorrow?
17:17Very likely.
17:18Is it a certainty?
17:20No.
17:21You know, a lot of people talking about how the quantum of cash
17:26that domestic mutual funds were sitting on,
17:28and it will be interesting to see the buying figure today,
17:30that may have brought it.
17:32I doubt that mutual funds would buy into the market
17:34just on a 1% or 1.5% downtick.
17:37So I think that side of the equation need not necessarily be true.
17:40Remember, we've been falling for Friday, Monday, Tuesday we fell.
17:44So it's three days of a fall.
17:45Some bit of short covering might also have happened.
17:47It will be important to look at the cues today evening,
17:50both the institutional number that come in
17:52and the derivative action that has happened to try and figure out.
17:54But is it the end of the road?
17:56I think most people said they would want to wait and watch.
17:58We are not able to predict right now
18:00whether the markets will necessarily go down tomorrow.
18:02Historically, I think the belief is it's back to business.
18:05Back to owning.
18:06Budget euphoria or disappointment.
18:08Back to owning.
18:09I guess Bajaj finance is not...
18:12People are relieved the budget is over.
18:14You can get back to the nitty gritties.
18:16And it's, I mean, because that's the theme right now,
18:20it's a graze from the ear, not a shot in the head.
18:23Since we are in that stage.
18:27It's not a complete assassination of the F&O kind of euphoria.
18:32It's just a graze to the ear.
18:34And maybe that's something that will be digested.
18:37Markets will come up with their fists raised high.
18:39Crossed fingers for that.
18:41Trump reference.
18:42But guys, we have four minutes or five minutes left.
18:44Anything else that stood out?
18:45Anybody?
18:46Very quickly.
18:47Let's make this quick now.
18:48I have just one take on Nirmala Sitharaman.
18:50Because when she came in as finance minister
18:52after the late Arun Jaitley passed away.
18:55And this is just something I've seen chatter.
18:57She was initially underestimated.
19:01A lot of people on Twitter, you know, love to take on her.
19:04Consistently performed on the two or three key things
19:08that finance ministers are judged on.
19:10Are you tightening your belt on fiscal glide path?
19:13Even during COVID, did not let things go out of whack.
19:17No free hand on giving away freebies
19:21which will wreck the balance sheet.
19:23Been very, very conservative.
19:25Clear headed. No nonsense.
19:27And has not had to roll back too much.
19:29Which in the history of Indian budgets
19:31is something that happens all the time.
19:33So a word here, even after these elections
19:36it was being speculated,
19:37will Nirmala Sitharaman get the finance portfolio again?
19:41Will there be other contenders?
19:43She's been, I would say, the dark horse in this race
19:45who has emerged very, very strong
19:48with a solid track record.
19:50And I don't think anybody will contend with also.
19:52The one time that she had to roll back,
19:53she did it very immediately without any kind of issues.
19:56So I think no contention out there on
19:58how well the FM has performed.
20:00Really full marks to her.
20:01I have a point to add.
20:03See, the overall budget philosophy,
20:08we came to know, our viewers,
20:10network viewers, NDTV network viewers
20:12came to know from the Prime Minister
20:14when he gave an interview to our Editor-in-Chief Sanjay Phugalia.
20:17Very clearly, these five key priority areas,
20:21he said, this is what I'm going to focus
20:23and the budget is focusing.
20:24Apart from all the other changes that have happened,
20:27farmers, jobs, welfare schemes,
20:32uplifting poverty, MSMEs,
20:36and women.
20:39And state competitive federalism.
20:42So she is focused on all those five areas.
20:44Now, it's a question of implementing them over five years.
20:47So just to remind the viewers that
20:49the PM's interview to NDTV network highlighted all this.
20:53And I think it's an important point,
20:54that it's a five-year piece.
20:55But anyways, yeah, we can go on with this.
20:57Sameena, Sajid, any last points?
20:59Anything else?
21:00I think from a personal taxation front,
21:02I think people would be happy that, okay...
21:05Section 80C deserved a little bit more lease of life,
21:08but that's clearly not her plan.
21:10Maybe she wants you to go to the new technology.
21:13And even on women, I must say,
21:15on women, there's a request to states
21:17to make it easier for women to buy properties.
21:20That's pretty much...
21:22It's a request to states.
21:23Some of the states already have a lower...
21:25So it's asking states to do it.
21:26So nothing really...
21:28Yeah, buy properties, but don't sell.
21:29There's nothing really, as of today,
21:32nothing really today as for women.
21:34Yeah, what was missing, I thought,
21:35just one last point from mine,
21:37in the interim budget,
21:38they made this very interesting thing,
21:40and I missed it maybe,
21:41but they'd made this very interesting provision
21:43or mention about a one lakh crore for research,
21:46because, you know, R&D activities need to step up.
21:48I was hoping something would be mentioned around that.
21:50No, they retained it.
21:51They retained it.
21:52She reintentionated it.
21:55But I think, yeah, tough for investors,
21:57good for jobs, good for employment,
21:58good for the young,
21:59and good for political priorities as well in some ways.
22:02Yeah, not...
22:03And done very well.
22:04Didn't give too much to allies.
22:05Didn't give away too much.
22:06Done very well, that's the point.
22:07Didn't give too much to allies either,
22:08kept them all happy.
22:09They can go back to their constituencies
22:10and say that, see, Andhra Pradesh and Bihar
22:12got what they deserved,
22:13but hasn't given too much away.
22:15Andhra Pradesh got a lot.
22:16Yeah, yeah.
22:17And not giving away too much.
22:18In terms of allies, but of course,
22:19Northeast, Orissa, it was just, yeah,
22:21high on headline value, right?
22:22Yeah.
22:23But, I mean, which is great.
22:24A budget shouldn't essentially be
22:26necessarily a market-moving
22:28or economic-moving, economy-moving event.
22:31It should be a statement of accounts,
22:32and I think in that sense,
22:34this has turned out very well,
22:35say, for people who will look at taxes
22:38because there are a lot of changes there.
22:39But, well, that's it on this edition of the Editor's Cut.
22:43We hope you found it useful.
22:44Thanks so much for tuning in.
22:46You can mention in the comments segment
22:48what do you feel about this.
22:51And remember, stay tuned to NDTV Profit
22:53for more news and updates today evening,
22:55as well as tomorrow morning,
22:56a power-packed lineup to take you
22:58through the finer points of what the union budget
23:01had to dish out for the economy
23:03and for the investing fraternity.