MY BIZ: Stairway to infrastructure
The Union Budget for 2013-14, which will be presented by finance minister P.
Chidambaram on February 28, is likely to lay special emphasis on investment to rev up the slowing economy, and is expected to contain a variety of sops to boost the capital markets and the infrastructure sector.
According to reliable sources, Chidambaram may go in for a reduction in the securities transaction tax (STT) – imposed on the buying and selling of shares in the stock market – and enhance the tax concession on the Rajiv Gandhi Equity Savings Scheme (RGESS) for new investors.
The RGESS is also likely to be made more investor-friendly, and to achieve this objective the lockin period of three years for purchase of shares may be reduced to one year.
Commonwealth Games construction work: The Barapullar Flyover linking the Jawaharlal Nehru stadium to the Games Village
A large number of demat account holders who have not undertaken any derivative trades recently are also expected to be allowed to invest in the Scheme.
SST served as an added source of revenue during boom time but is now seen to be hampering trade. Chidambaram has also expressed concern over the fact that the proportion of Nifty futures traded overseas is going up, as a result of which domestic stock markets are losing business.
Currently, the lower rate of taxation on the F&O (futures and options) segment also tends to encourage more speculation rather than delivery-based trading in the cash segment.
So, a rationalisation of STT, which is levied at 0.1 per cent on delivery trade, is expected to help correct this distortion.
A senior official told Mail Today that Chidambaram is keen to channel more savings into stock markets so that they can be used for productive investment by industry.
This would also help to divert part of the household expenditure on gold into stock markets and reduce the pressure on the current account deficit.
A senior official said: “While there is a need to curtail the fiscal deficit, there is no escaping from the fact that Budget would have to step up investment in order to push up the growth rate.”
The Budget is likely to announce more investment incentives in power, highway and port projects.
Private-public-partnership projects have started assuming a greater importance as the government is banking heavily on the private sector to bring in more investment in infrastructure.
Such projects will require tax incentives and new forms of finance, which the Budget is expected to help in addressing.
The share of private investment in the total investment in infrastructure has increased significantly from 22 per cent in the 10th Plan to 38 per cent in the 11th Plan, and is projected at 47 per cent during the 12th Plan.