NEW DELHI: One of the factors holding investment is that equity is taxed at different levels, which is forcing investors to park money at debt funds, leaving little risk capital available for business, said Uday Kotak, founder, managing director and chief executive officer of Kotak Mahindra Bank, on Monday.
Speaking at a conference organised by the Confederation of Indian Industry (CII), Kotak said, “We have so many levels of taxation. At the other hand, debt instruments like NSC and PPF are more attractive than bank deposits, which make retail investors more comfortable putting their money in debt. Then you don’t have enough risk capital available for building new businesses or expanding existing ones,” he said.
Kotak, who is CII’s president designate, said taxes on equity returns have to “encourage investors to take equity risks”. He, however, felt that the liquidity situation has improved, compared to last six months. “High-quality NBFCs are beginning to get finance at lower credit spreads,” Kotak said.
The chamber has sought tax cuts, lower interest rates and bold policy reforms such as land acquisition and labour laws in its vision document prepared to aid the government to achieve double-digit growth. “With a landslide electoral victory and new council of ministers in place, we expect the government to engage strongly with industry to ideate and implement impactful policy solutions for double-digit growth,” said Vikram Kirloskar, chairman and managing director of Kirloskar Systems, who is also the CII president.