Why the government is unlikely to cut capital gains tax My column @91basispoints (No Paywall. You just need to register). Fund managers, stock brokers, wealth managers, investment bankers, financial influencers, anchors on business news channels – and just about anyone in and around the business of managing other people’s money (OPM), are only saying one thing these days: Cut capital gains taxes and get foreign investors back. But will the government bite the bullet. The OPM wallahs badly want it to. The taxes collected by the central government will take a beating this year. In late March, the government cut the excise duty on both petrol and diesel by ₹10 per litre. Depending on which economist you want to believe this is expected to cost the government anywhere from ₹1.3 lakh crore to ₹1.7 lakh crore in 2026-27, assuming that the cut stays. Along with this, the corporate income tax collected is going to take a hit. The oil marketing companies are big corporate tax payers. They are currently selling petrol and diesel at their pumps at a loss. The chances that they will make any profit this year are non-existent. This will hurt the government. If the war in West Asia continues, the fertiliser subsidy bill of the government is likely to balloon. Again numbers vary from Rs 50,000 crore to Rs 1 lakh crore. The government will have to take measures in order to support the economy. This money will have to come from somewhere. in a scenario where the common man is suffering, the government can’t be seen to be cutting the capital gains tax – a cut which will benefit the rich and the foreigners. It is bad for the WhatsApp narrative, which has become a very important part of the political discourse these days. basispointinsight.com/Story/…

When I met a financial influencer My weekly Paisanomics column in the Mumbai Mirror. Something I had great fun writing. Do read and share. The link is in the first comment. Sometime back I sat across a finfluencer to record a podcast. He was shocked I kept money in FDs. Shocked that smaller stocks fell 80% between 2008-09. He didn’t like it when I said that even the most famous investors – from Warren Buffett to Rakesh Jhunjhunwala – always spoke in broad generalities in public. They never gave away their formula. And why would they? Or that most people working in the business of managing other people’s money (OPM) just had one KRA: to keep saying that the stock market will go up because it’s gone up in the past. The podcast still hasn't dropped. Funny, that. Or as Upton Sinclair once said: "“It’s difficult to get a man to understand something when his salary depends on his not understanding it.” Here's what I've figured: finfluencers don't sell investing. They sell certainty. Being overconfident is the very nature finfluencing. It helps build a loyal following. As Vivek Nityananda writes in Beyond Doubt: “Advice by confident people is more likely to be followed.” Which is why there are barely any nuanced finfluencers. It’s all up, up and away for them. Knowing history is bad for their business. Most finfluencers became popular only after the pandemic broke out, when stock prices went from strength to strength. And that’s the story they can most easily recall and want to sell. And the best ones deceive themselves first – so they don't have to work as hard deceiving you. Confidence is not the same thing as competence. Never has been. Indeed, as Paul Beatty writes in The Sellout: “Money talks, bullshit walks.” mumbaimirror.indiatimes.com/…

Rupee@95: Why the RBI will keep defending the rupee The Rupee’s Mauna Kea Problem: What We Don’t See Matters More My column for @91basispoints. First, as a retired RBI governor told this writer sometime in the late 2000s, doing nothing is not a strategy that the RBI can follow. In times of crises, it has to be seen to be doing something. Second, the rupee is as much a political issue as it is an economic one. Hence, allowing it to keep depreciating without major intervention is not a strategy that the RBI can follow. Third, the continued depreciation of the rupee will have an impact on the fiscal deficit of the government. Indeed, decisions made by central banks are rarely purely strategic. By choosing the slightly messy tactical path, the RBI is acknowledging that while the costs of intervention are visible, the costs of doing nothing are hidden. basispointinsight.com/Story/…