Right opportunity to ride the equity wave: Rajiv Bajaj of Bajaj Capital

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With the Finance Minister, Nirmala Sitharaman presenting a growth-oriented budget, it is time for investors to have stability in one’s own investment portfolio to achieve the long term goals according to Rajiv Bajaj, Chairman & MD, Bajaj Capital.

In an interview with Money9, Bajaj shares his views about the Budget and what it holds for the markets and the common man.

Edited excerpts:

Q. What are your key takeaways from the Union Budget 2021-22, especially on the personal finance front?

Bajaj: The best thing that has happened is that there were no new taxes introduced by the Finance Minister. That means, more money remains in the hands of the individual to invest and spend. The apprehension about Covid-19 cess has also been set aside. With the focus of the government strongly reflecting on growth, there will also be job opportunities and will also help in income level rising over time. For those who haven’t started yet, the time has come for individuals to take note of their personal finances, prepare a long term path to achieve their goals and make use of the investment opportunities available in the market.

Q: In a Covid-hit year, does this budget do enough for the common man, including leaving more disposable income in their hands?

Bajaj: Definitely! Until now, a Covid cess was expected as the government’s revenue was under pressure in 2020. With no new cess or tax being introduced, the common man certainly has relief and will see more money in hand. With the FM presenting such a growth-oriented budget, it is time for investors to have stability in one’s own investment portfolio to achieve the long term goals with ease.

Q: The Finance Minister has left the personal income tax untouched. How do you see this?

Bajaj: No change in personal income tax structure is certainly a welcome step. Last year, the new tax regime was introduced which will be available to a taxpayer as an option in addition to the existing regime. Another welcome move has been for senior citizens who are above 75 years of age and have income only from pension and interest. They need not file ITR going forward.

There were expectations on higher Standard Deduction limit and higher deduction limit under Section 80C. What are the measures that you had expected which were missing? What could the Finance Minister have done more?

Senior citizens rely on interest income and investments that fetch regular income. The government could have made annuity or pension received by senior citizens tax-free. Also, tax benefit on health insurance premium may have been increased, both for seniors and others. This was much required in the Covid pandemic environment.

Q: How do you see the measures of easing of tax filing and moves such as improving tax dispute resolution, reduction of period for reopening of assessment and faceless assessment and appeals?

Bajaj: The move will certainly help small taxpayers and senior citizens who earn income only from deposits and pension. Steps have also been taken to impart greater efficiency, transparency and accountability to the assessment process.

Q: The markets have given a thumbs-up to the Budget. Do you think it is a budget that will drive markets higher in the coming days and why?

Bajaj: Lots of factors have their role to play both internal and external to the economy. In short to medium term, equity markets may remain volatile. Over the long term, the momentum is for the upside. Systematic Withdrawal Plan (SWP) remains a viable option for investors to participate in the growth potential of equities and debt and also meet regular income needs. For long term investors, it certainly is the right opportunity to ride the equity wave and create wealth over the long term. Build a portfolio of consistently performing diversified equity funds and link them to your long term goals. Either through lump sum or Systematic Investment Plan (SIP), if you are investing after taking care of inflation, reaching long term goals will be a cake walk. It certainly looks a ‘budget in like never before’.