Page 95 - mutual-fund-insight - Mar 2021_Neat

FOREWORD

A simple Budget for

a simple time

crisis can make life simple, just ly find myself writing about on
reducing it to the absolute Budget day, there isn’t much here.
Anecessities. Many, perhaps most Apart from a couple of small adjust-
of us, have experienced this since the ments, there’s nothing has changed in
Chinese virus hit us in March. Most the realm of savings, investments and
of the activities and complexities of related areas. One interesting change
life melted away, postponed for some is in ULIPs, where a number of tax
far-away future. The formula became loopholes have been closed.
simple – just keep yourself safe while As most knowledgeable savers have
keeping work/business going as best known for many years now, ULIPs are
as possible. essentially a subterfuge whereby the
Ms Sitharaman had an equally sim- insurance industry fools people into
ple task for this Budget. Spend a lot buying expensive, opaque and poorly
of money, and just borrow what is performing investment products that
needed. In terms of the overall direc- are disguised as insurance to take
tion, this must have been the simplest advantage of the tax advantage that
Budget in years. For the first time in has been allowed for genuine insur-
living memory, there is hardly any ance products.
need for a fiscal high-wire act. 2020- The exemption is now limited to a
21’s revised Budget estimate is 9.5 per total of `2.5 lakh per annum across
cent. That’s a number that would all ULIPs a person may invest in. In
have had most analysts splutter and my view that’s still 2.5 lakh too much
foam at the mouth a year ago. And yet but this is at least some improvement.
no one has batted an eyelid. In fact, in Additionally, upon redemption of a
the first few hours after the Budget, I ULIP, it will now be treated in the
did not hear even a single comment same way as an equity mutual fund.
about it. Essentially, this means that the tax
Next year’s Budget estimate is laws are now less skewed against
above 6 per cent and the chances of it competing investment products like
being exceeded are pretty high and yet mutual funds.
that too has generally been met with a All things considered, the virus is a
‘What can you do’ shrug by almost crisis that can be turned into an
everyone. Essentially, the government opportunity in many
has got a two-to-three-year free pass on areas. The Budget
the deficit and can borrow and spend shows that the govern-
liberally as far as general criticism ment recognises that
goes. Of course, the economic costs of this is the best course
fiscal deficits will have to be paid but to take. Will it work
as the last few months have taught us out? I think it will.
all, there are no perfect solutions, only
trade-offs. At this point, one can carp DHIRENDRA
about this or that detail, but the trade- KUMAR
off that the FM has chosen is the obvi- CEO,
ous, practical one. Value Research
As for the small stuff that I general-

3 BUDGET & YOU

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