The Stock Market is Not Enthusiastic Because…: Financial Expert Weighs in After Budget 2025 Tax Relief
The highly anticipated Budget 2025 was unveiled last week, and the market was left underwhelmed. Despite expectations of a significant stimulus package, the government’s proposal for tax relief has fallen short of investor expectations. In this article, we’ll delve into the reasons behind the lukewarm reception from the stock market and hear from a financial expert on what this means for investors.
A Mixed Bag of Measures
The Budget 2025, presented by the Finance Minister, included a mix of measures aimed at boosting the economy. The government announced a 10% tax relief on dividend income for individuals, as well as a reduction in corporate tax rates for small and medium-sized enterprises (SMEs). Additionally, the budget included a slew of infrastructure projects and a relaxation of rules for foreign investment.
However, the measures failed to address the key concerns of investors, particularly the high interest rates and the impact of inflation on household incomes. As a result, the stock market reacted with a collective shrug, with indices opening lower and trading flat throughout the day.
What’s Missing?
So, what’s missing from the Budget 2025 that’s causing the stock market to remain unenthused? According to financial expert, Rohan Pandey, the lack of bold action on interest rates and inflation is a major concern. "The Reserve Bank of the country has been keeping interest rates high to curb inflation, which is having a ripple effect on the economy," Pandey explained. "Unless the government addresses this issue, it’s difficult to see a significant turnaround in investor sentiment."
Another area of concern is the limited scope of the tax relief measures. While the 10% tax relief on dividend income may be beneficial for some individual investors, it’s a drop in the ocean compared to the overall tax burden. "The government needs to go further in terms of tax relief, particularly for low- and middle-income individuals who are struggling to make ends meet," Pandey said.
What’s Next?
So, what’s next for investors in the wake of the Budget 2025? Pandey believes that the lack of enthusiasm from the stock market is a sign that investors are looking for more concrete action from the government. "The budget has failed to address the key concerns of investors, and as a result, the market is unlikely to react positively in the short term," he said.
However, Pandey remains optimistic about the long-term prospects of the economy. "The budget has laid the foundation for growth, and if the government follows through on its promises, we could see a significant turnaround in investor sentiment over the next 12-18 months," he said.
Conclusion
The Budget 2025 has fallen short of investor expectations, and the stock market is reflecting this sentiment. While the measures announced may have some benefits, they fail to address the key concerns of investors, particularly high interest rates and inflation. As a result, the market is unlikely to react positively in the short term. However, with the government laying the foundation for growth, investors should remain optimistic about the long-term prospects of the economy.
