A golfer tees off near a high-rise luxury apartment block under construction in Noida, India (Photographer: Pankaj Nangia/Bloomberg News)  

Budget 2019: Taxes On Super Rich Have Crossed Usurious Limits, Says Enam’s Chokhani

India’s plan to raise capital overseas by selling bonds will kick-start an investment cycle in the country. That, according to Manish Chokhani, is the biggest takeaway from the union budget.

“It would be a disservice to an economy if we don’t attract foreign capital as negative to 2 percent interest rates prevail in a few western countries,” Chokhani, director at Enam Holdings, told BloombergQuint in an interview. The move will probably reduce the liquidity pressure on the domestic market and strengthen the rupee, he said, adding that India should use this money by creating and selling assets to reduce its $100-billion-a-year interest cost.

Finance Minister Nirmala Sitharaman, in her budget speech, said the government would raise part of its gross borrowing requirements through foreign currency. She didn’t specify what proportion of that would come through such debt like sovereign dollar bonds.

On Raising Minimum Public Float

The government proposed to raise minimum public shareholding limit in listed equities to 35 percent from 25 percent. The move is expected to bring in a minimum capital inflow of Rs 2.5-3 lakh crore into the markets in the next few years, said Chokani. That would help increase India’s weight in MSCI and other global indices, he said.

On Higher Taxes On Super-Rich

Chokani said the only “sore thumb” in the budget was increasing taxes on the super-rich instead of taking measures to boost indirect tax collection. Finance Minister Nirmala Sitharaman introduced a higher tax on those earning more than Rs 2 crore a year, urging India’s wealthy to make a larger contribution to the nation’s growth.

This gives a wrong signal to wealth creators to move money overseas rather than creating capital domestically, he said.

It’s foxing to me on why that (increasing indirect tax revenue) isn’t being addressed as opposed to going after the so-called super rich every year where taxes have crossed the usurious limits currently.
Manish Chokhani, Director, Enam Holdings

Watch the full interview here:

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