Budget 2021: New taxes pointless; prefer reallocation of current resources, says Raamdeo Agrawal

Companies become bigger and better because of investments in infrastructure, said Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services, on Wednesday.

Speaking in an interview to CNBC-TV18, he said, “In stock markets the companies become bigger and better and they grow because of reinvestment in their physical infrastructure. So, for building a company, you have to reinvest every year and most aggressive companies reinvest 100 percent of their profits or 80-90 percent of their profits.”

“What can government do in this budget -- post-COVID, new startups? Can they change the arithmetic of their budget to find a lot more resources for reinvestment in the economy,” he said.

On the tax front, Agrawal said, “This is a time not to give any tax concessions for sure. This is a time to think about how to garner resources and re-allocate them. Real important for reinvestment is to get some kind of operating leverage in the economy and put that effectively into building infrastructure and frontload the entire infrastructure spend.”

Therefore, said Agrawal, no point in going for new taxes. I would rather prefer the reallocation of current resources.

For entire interview, watch the video