The equity markets are pricing significant expectations from the Government's moves on the budgetary exercise and, of course, linked to it is potential recovery in economic performance and corporate earnings.
As regards reforms some innovative steps to boost infrastructure to jump-start the capex cycle, this could include tax sops/enabling cheap capital through various measures and encouraging public funding/enabling FDI investments/concrete measures to encourage FDI and private investment in select areas such as railways and defense.
There are also expectations with regards to increase in basic tax exemption limit from current Rs 2.5 lakh by 20-30% and tinkering with salary exemption limits for key deductibles to keep the salaried happy and increase disposable income. Sops for housing in areas of affordable housing or making housing accessible to middle class is on the cards.
The Finance Minister should also do something to make equity investing relatively more attractive. Initiatives like removal of dividend distribution tax and also setting a requirement for some minimum dividend obligations by profit making corporate could increase retail participation significantly.
Aashish P Somaiyaa is Managing Director & CEO at Motilal Oswal AMC.