The decline in local equities following the government’s proposal in the Budget to raise the capital gains tax rate caused the Indian rupee, which is already at an all-time low, to weaken further versus the US dollar on Tuesday.
The government intends to boost the capital gains exemption ceiling on some financial assets to ₹ 1.25 lakh per year for middle-class and upper-middle-class individuals, according to Union Finance Minister Nirmala Sitharaman’s announcement on Tuesday. The rupee fell to 83.69 against the dollar, almost breaking over the previous all-time low of 83.6775. Prior to the budget announcement, the currency was trading at 83.6275.
Following the Union Budget announcements, the stock market fell, which analysts suggested might have a short-term detrimental effect on the markets.
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According to exchange data, Foreign Institutional Investors (FIIs) bought shares worth ₹ 3,444.06 crore on Monday, making them net purchasers in the capital markets. India’s GDP growth rate was predicted to be 6.5-7 per cent in 2024–25 by the Economic Survey 2023–24, which was presented in Parliament on Monday. This is a decrease from the previous financial year’s high growth rate of 8.2 per cent.
The Reserve Bank’s (RBI) growth projections of 7.2% are slightly higher than the Economic Survey’s estimate.
