Sundeep Sikka, CEO, Reliance Mutual Fund feels that the 2012 budget should rationalize tax structure to encourage long-term savings in equity markets through mutual funds.
What key priorities and concerns should the budget address? The recent Q3 figures were certainly lower than expected. Domestic economy is facing headwinds from high inflation, high interest rate, anemic investment, series of government scandals, slow pace of market-friendly reforms and poor confidence against the backdrop of dismal global outlook. The growth in the next fiscal will also remain around 7%, unless RBI starts slashing rates and government rolls out reforms along with some fiscal consolidation.
This can definitely create hurdles in the India growth story. However, I am very hopeful as India has great potential. The government must take timely action so that investor sentiment is not affected.
The key issues that the budget should address is injecting growth stimulus to maintain stability in growth.
What measures do you think are needed to make our capital markets stronger?
Money from institutional investors is one of the key factors responsible for market volatility and liquidity. I strongly believe that encouraging long-term savings from retail investors in asset classes such as equity, debt and gold will be the right step in bringing stability to the capital markets.
With mutual funds still accounting for a tiny fraction of household savings, what needs to be done to make MFs, from a policy perspective, to widen their reach?
Overall, though salaries of the common man have increased, inflation has resulted in the decliningvalue of money. The government needs to focus more on rationalization of tax structure in favour of small, individual investors to long-term savings in equity markets through mutual funds.
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