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The capital market has given a definite thumbs-up to the Union Budget for 2021-22 by Finance Minister Nirmala Sitharaman, and in style. BSE Sensex jumped up by 2,314.84 points or 5% to close at 48,600.61 while Nifty 50 rose sharply by 646.60 points or 4.74% to close at 14,281.20.

But does the market exuberance hide some disappointments? Quite possibly, yes. Many  were expecting some immediate relief on the taxation front or other measures that would leave some extra disposable income in their kitty.

There were expectations that the Standard Deduction limit might be hiked from the existing Rs 50,000 or some additional leeway in tax deduction limit under Section 80C of the Income Tax Act may be raised from the existing Rs 1,50,000.

But that was not to be. The Finance Minister has let the personal income tax regime remain as is it. She has chosen stability in the tax regime over repeated tinkering with the tax structure. And she is justified at that.

Prime Minister Narendra Modi had pointed out earlier, Union Budget of 2021-22 would be an extension of the series of 4-5 mini-budgets of 2020 that the Finance Minister had announced since March 2020 when economy and the people at large had come under the devastating grip of the Covid-19 pandemic.

The ‘mini-budgets’ were large packages and schemes amounting to several lakh crores announced by the government which included tax reliefs and measures to boost consumption by providing more money in hands of consumers.

After a torrid year of meeting challenges head-on, now was the time for consolidation. While a slew of measures have already been announced to strengthen the economy, including huge spends on infrastructure and healthcare, Finance Minister Sitharaman has now announced measures that would ease the life of many taxpayers.

These include a halving of the years within which an assessment can be opened from 6 years to 3 years with certain caveats, easing tax filing by widening the pre-filled IT returns with more details on capital gains from listed securities, dividend income, and interest from banks and post office and exempting senior citizen’s above 75 years who have only pension and interest income from filing income tax returns. Sitharaman has also proposed faceless appeals on disputes by establishing a National Faceless Income Tax Appellate Tribunal Centre with only digital interaction between the tribunal and appellant.

With failures of lending institutions hitting the headlines recently, the move to facilitate depositors of such troubled institutions to access their deposit up to Rs 5 lakh for which DICGC cover is provided would come as a comfort.

The icing on the cake is that the Finance Minister has not provided any negative shocks to the saving and investing communities. There were talks of a possible Covid-linked levy and higher taxes on the already heavily taxed super-rich category.  The Finance Minister has instead chosen the long route to laying a more solid foundation for the economy by focusing heavily on infrastructure spends. This holds huge job creation potential which would, in turn, increase consumption power of many. Also the government has asserted that it has brought in increased transparency in its financials. In the long run, a strong economy will benefit all its stakeholders.

However, a word of caution: The market’s knee-jerk reaction should not be seen as an invite for blindly investing in equities in the hope of quick gains. Equity markets can always flatter to deceive. It is never a one-way journey and one has to take judicious bets and that too for the long run.