LTCG rationalisation will bring back the bulls; policy uncertainty will disappoint the markets: Nirmal Jain

Rationalisation of the long-term capital gains (LTCG) tax, fiscal discipline, and stability of policies in the medium term is expected to drive positive sentiment in the market, said Nirmal Jain, Chairman, IIFL, in an exclusive interview to Moneycontrol.

Elaborating on this, Jain suggested that the government should maintain consistency in policies like Make In India that incentivise the manufacturing sector.

He added that an increase in capital gains tax or estate duty would be a little disturbing for the market. `A populist budget which creates policy uncertainty will impact market sentiment,'' he said.

Preferred themes:

Jain said the ‘Make in India’ theme would probably get further impetus in the coming budget, as a resurgent India was in a sweet spot in a world beleaguered by inflation and fears of recession.

For the first time, Jain expects India to emerge as an alternative to China for companies looking to outsource.

This is a great opportunity for the country. The government should accelerate the growth of the manufacturing sector with the PLI (production-linked incentive) scheme,’’ Jain explained

Due to signs of revival in private capex, he expects the government to also lay huge emphasis on public capex and investment.

Jain said the growth in private capex would come on the back of higher capacity utilisation, mostly in export-oriented units.

"Private capex should pick up pace over the next 12 months. I hope the government will ensure a stable working environment in terms of tax and policy stability (like incentives)," he explained.

Last but not the least, the IIFL Chairman thinks the government should also incentivise the farmers and the poor, broadly, the lower strata of society, that has been hit the most by inflation.