It is not without reason that the Union Budget is the most anticipated and followed event of the financial year. By giving an outline of the various measures that the Central Government intends to undertake in the upcoming year, the Union Budget not only sets the expectations for future initiatives but also gives investors a sneak peek at the Government's intentions.
While the market's reaction to this year's Budget has been largely muted, readers must bear in mind that the true impact of the Budget is not to be gauged on the day of the Budget, but by its long-term impact on the economy. So, we have put together a list of announcements which are, in our opinion, the most significant:
- The Government intends to issue "Green" bonds for raising funds to finance green infrastructure with the aim of reducing the carbon footprint.
- A separate committee will be set up to examine and recommend measures to remove regulatory hurdles in scaling up Venture Capital and Private Equity investments in order to encourage the Start-up ecosystem.
- Funding for sunrise sectors (Digital economy, Agri-tech, Deep-tech, etc.) will be promoted through Government-backed funds [such as National Investment & Infrastructure Fund (NIIF)] and SIDBI, in association with private fund managers.
- Tax incentives for eligible start-ups will be extended to those which are incorporated in FY2023.
- Virtual digital assets (such as Bitcoin and other cryptocurrencies) are to be taxed at a rate of 30%.
- With the successful disinvestment of Air India (enterprise value of Rs 18,000 crore) and the grant of approval for the highest bidder for Neelanchal Ispat Nigam (enterprise value of Rs 12,100 crore), the Government is now focussing on launching LIC's IPO as well as pursuing other divestment options.
- New services for foreign investors are to be facilitated in the International Financial Services Centre (IFSC).
- The surcharge on the tax on long-term capital gains on unlisted shares has been reduced to a flat rate of 15%.