Surprised on some cuts in personal taxation: Prateek Agrawal

Prateek Agrawal, Head – Equities, Bharti AXA Investment Managers

The budgetary maths has been more or less in line with the short note that we circulated earlier. However, the budget did manage to surprise with some cuts in the personal taxation. Most of the revenue is being sought to be raised through increase in excise duties and duties on crude and petro products. The budget has positive measures such as bringing the subsidies into the main budget as opposed to the practice of issuance of oil bonds.

While the move to raise revenues through indirect taxes would be seen as being inflationary, we believe that given the expected number on net government borrowings, the bond market would not react negatively. Clearly a low interest rate environment (in terms of lending rates) is conducive for the growth of infrastructure sector in India. Measures like Infrastructure tax free bonds would also channel savings into this space and take care of the asset liability mismatch to some extent.