Quote on Union
Budget 2026 by Mr. Ashwani Dhanawat, Executive Director and Chief
Investment Officer, Shriram General Insurance.
“A
growth-focused, simplification-heavy budget with strong welfare and infra
underpinnings
The
2026-27 Union Budget, delivered from Kartavya Bhavan under the guiding
principles of the three Kartavyas, delivers a robust, reform-oriented roadmap
for Viksit Bharat. It sustains high capex momentum (up to ₹12.2 lakh crore),
accelerates manufacturing in frontier sectors (e.g., ISM 2.0 with ₹40,000
crore, BioPharma Shakti at ₹10,000 crore), rejuvenates legacy clusters,
champions MSMEs through equity funds and liquidity tweaks, and pushes
infrastructure with high-speed rail corridors, waterways, and city economic
regions.
Specifically
for general insurance industry, the compassionate exemption of TDS (and full
tax) on Motor Accident Claims Tribunal interest awards stands out as a
victim-friendly relief, ensuring faster, untaxed access to compensation for
those in distress— a thoughtful step toward ease of living.
A
particularly positive move for investors and corporates is the revised taxation
of share buybacks: proceeds are now taxed as capital gains for all
shareholders, addressing past anomalies and aligning buybacks more equitably
with other equity distributions. This promotes fairness for minority
shareholders while curbing potential tax arbitrage—corporate promoters face an
effective 22% rate, non-corporate at 30% via additional levies. Overall, it
streamlines corporate capital allocation, reduces differential treatment, and
could encourage more transparent shareholder returns without excessive
complexity.
On the
flip side, the hike in Securities Transaction Tax (STT) on futures and
options—futures to 0.05% (from 0.02%) and options premium/exercise to 0.15%
(from 0.1%/0.125%)—is a negative for active traders and the derivatives
ecosystem. It raises transaction costs, potentially curbing speculative
volumes, impacting liquidity in F&O, and contributing to immediate market
pressure (e.g., Sensex/Nifty drops post-announcement). While aimed at
moderating excessive derivatives activity and boosting revenue, it could dampen
retail participation in a bull phase and affect broking revenues short-term.
Net-net,
this is a growth-focused, simplification-heavy budget with strong welfare and
infra underpinnings—balanced by prudent revenue measures. The buyback tweak is
a clear win for equity market health, while the STT increase tempers enthusiasm
in high-frequency trading circles. Execution and market adaptation will define
its success in the coming year.”
