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A bit contrary. First things first, I don't think this will spur more CapEx from the big firms. CapEx is done based on demand and not on extra money in the bank. But my grouse is different. This will make the big, even bigger. The US model.
There was an absolute need to encourage relatively smaller firms (firms say less than 1000 cr or even 5000 cr) to get this tax break. Giving tax breaks to HDFC bank, Asian Paints, Bajaj Finance...I mean, HDFC bank will save 3000 cr in taxes, which re-invested will make HDFC Bank.
..even bigger. Some NBFCs don't have book of 3000 cr let alone tax savings. Leads to crowding out - I mean, we may talk about multiplier effect in FS - but the argument is valid for all sorts of large companies.
I mean, long large cap, short mid and small cap should work very well in the long run given these kinds of savings. I mean, its absolute nuts to give tax breaks to large companies. In fact, less than 5000 cr sales having this differential would have a good advantage to them..
The mandatory, happy with the move and all. I mean, my portfolio is up as well so who wouldn't be happy. But not very kicked about this big getting bigger initiatives. Will destroy the smaller guys in the long run. Of course, another week atleast of bull coming. So, let's party.
