Ashutosh Financial Services believes that sound investment decisions are built on a clear understanding of the environment they are made in, and few events shape that environment as directly as the Union Budget. Each year, the firm sets aside time to unpack the budget for its clients and the wider community, translating policy language into something that actually helps people plan. It is a habit rooted in the conviction that financial confidence grows from financial understanding, not from following headlines alone.
This year’s edition, the fourteenth in a series the firm has run since the mid-2000s, was held in Rajkot on 9th July 2019 for an audience of high-net-worth individuals. The session was led by Daxesh Kothari, who has anchored these annual budget discussions for the firm. Given the audience’s exposure to equities, mutual funds, and cross-border holdings, the timing mattered: this was the first full budget of the newly re-elected government, and it carried implications for surcharge rates, corporate taxation, and compliance that would directly affect how HNI portfolios were structured and reported.
The session opened by placing India’s economy within a global frame. Among the world’s twenty largest economies, India recorded the fastest GDP growth at 7.1%, ahead of China’s 6.6%, even as inflation across major economies stayed contained and interest rates in several developed markets hovered near zero or turned negative. Domestically, the picture was more mixed. India’s own growth momentum had been slowing, though consumer inflation had eased steadily, from 5.9% in 2014-15 to 3.4% in 2018-19, giving policymakers some room to manoeuvre. Forex reserves remained healthy and the rupee, while it had depreciated by about 12% over five years, had held relatively steady in the preceding year. Two more sobering indicators were also discussed: non-performing assets at banks stood near Rs. 8 lakh crore, and automobile sales had fallen sharply across most manufacturers, both signs of stretched demand in parts of the economy. On the other hand, domestic investors were showing consistent commitment, with monthly SIP flows into mutual funds crossing Rs. 8,000 crore, adding up to roughly Rs. 96,660 crore a year, a trend that has helped cushion markets even when foreign investment turns volatile.
Against this backdrop, the budget’s key measures were reviewed in some detail. On the fiscal side, the government proposed raising funds through sovereign bonds issued in international markets, recapitalising public sector banks with Rs. 70,000 crore, and targeting Rs. 1.05 lakh crore from disinvestment. Forty-four labour laws were to be consolidated into four labour codes, and public sector banks were offered a partial government guarantee on NBFC loan portfolios they purchase, a move aimed at easing the liquidity strain in that sector. Listed companies were also asked to raise public shareholding from 25% to 35%, a change expected to improve free-float and price discovery over time, though it may prompt some multinational promoters to consider delisting.
The tax discussion carried particular weight for the audience. Individual taxpayers earning above Rs. 2 crore saw a new, steeper surcharge structure, effectively pushing the top marginal rate to nearly 43% for the highest slab, a change some in the room read as a substitute for a formal wealth or inheritance tax. Corporate tax at 25% was extended to companies with turnover up to Rs. 400 crore, covering the vast majority of Indian businesses. Compliance also tightened: return filing became mandatory in certain cases even below the taxable threshold, such as large cash deposits, high foreign travel spending, or significant electricity bills, and income tax returns began asking for more disclosure, including foreign assets, unlisted shareholdings, and directorships. New TDS provisions covered payments to contractors and professionals, property transactions, and large cash withdrawals, while relief was introduced for interest on loans for affordable housing and electric vehicle purchases, and for withdrawals from the National Pension System.
Kothari closed the session by returning to a line from Charles Darwin, on how survival favours those most responsive to change, a fitting note for a discussion built around adapting financial plans to shifting policy. For Ashutosh Financial Services, sessions like this reflect an ongoing effort to keep clients informed as the rules that govern their money evolve, not as a one-off exercise but as part of a continuing commitment to financial education that the firm intends to carry forward with future budgets and beyond.
