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ETMarkets Special Podcast (ETMarkets.com)

Why Modi and markets are not on the same page

10:25 Min | July 11, 2019, 5:53 PM IST
Let’s understand the real points of friction between the government and financial markets.
Hi there, Welcome to ETMarkets special podcast, this is Tanisha Sharma.

Dalal Street did not react kindly to Nirmala Sitharaman’s maiden Budget last week. While some analysts called the Budget 'uninspiring' and 'lacking immediate economy boosters', others cribbed about the hike in income-tax surcharge on the highest income group.

As investors and analysts continue to sulk, let’s delve a little deeper and understand the real points of friction between the government and financial markets.

We have with us Saubik Chakrabarti from The Economic Times

Hello Sir, a warm welcome to the show. You wrote a very thought-provoking piece in ET print today.

>> If we understood correctly, you are suggesting some kind of friction, if I may say so, between the government and the market community. I have two questions: First, if there one, really, and secondly, if there is one, what are the reasons behind it?

>> Supposing it exists, as you suggest, such a conflict is definitely not healthy for the economy. Now, my question is could the government have avoided it through better communication, interaction?

>> But then, there is also this perception, at least within the market fraternity, that the government looks at the stock market something on the lines of lottery or betting industry. I mean, a strong capital market is a basic prerequisite for industrial progress. And then we also talk about ease of doing business. You sense a problem somewhere, maybe it's just optics, but it exists. What are your views on this?

>> Let's talk about the income-tax surcharge itself... I read at least one market analyst calling it Robin Hood policy. That tax bumpup may not be much, but the government needed to have it to send out a pro-poor signal. Do you think it was just that? Was this tax avoidable?

>> Lastly, some FIIs are of the view that these tax changes happen without any consultation or prior hints, and they happen too often, thus such policies actually increases India's risk premium. They have a point there, isn't it? Again there is a communication issue, maybe.

That’s it for now. Do check out our regular podcasts during the week and stay hooked to www.etmarkets.com for continuous news updates, investment strategies from top market experts and all that’s buzzing on the Street. Bye Bye
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