Ashish Chauhan, the Managing Director and CEO of BSE Ltd, Asia's oldest stock exchange, feels the forthcoming Union Budget for 2013-14 must be one which is aimed at creating more jobs.
In a pre-Budget video interview with Firstpost, Chauhan also made it clear that the equity capital markets were currently bearing the brunt of heavy taxation, something which was driving investors away to other markets and impacting turnovers on the bourses.
“As I see it, India ’s job for the next several years is to create jobs. We have to create 1.5 crore new jobs every year, or 30 crore new jobs over the next 20 years. That can be done by allowing and encouraging productive capital creation,” Chauhan said, adding that without policymakers realising the impact of the heavy taxation on equity markets, there was a 'leakage' being created, since investors were staying away from equity and going to other markets which weren’t taxed.
“We create a framework where stock markets are taxed very heavily. In a good year, the government got over Rs 9,000 crore from taxing the markets but now people have walked away to commodities. Foreigners are choosing to trade in foreign markets. Investors aren’t coming in to equity and are going to gold, silver and other markets,” Chauhan said, underscoring the importance of stock exchanges in productive capital raising and job creation.
Calling for a positive policy framework for small and medium enterprises (SMEs), Chauhan also said the larger companies create less jobs per capita of investment than the SMEs and hence the smaller enterprises must be encouraged.
“They should be encouraged to get funding from the markets and the banking system. The next several Budgets should be pro-job ones. If we don't do that, we are doing injustice to the economy.”
On the Securities Transaction Tax, Chauhan said though it seemed a minute tax, it was per transaction and had “sucked away liquidity”.
"If you can't remove it because of fiscal deficit constraints, you need to provide a level-playing field so that other markets are also taxed similarly. It should not be a discrimination against stock exchanges."
Likening the taxation on equity markets to the ones on cigarettes and alcohol, he said the STT was proving to be a major disincentive for markets, though policymakers otherwise did provide incentives to markets through initiatives like the Rajiv Gandhi Equity Savings Scheme. "But basic trading is taxed heavily. All we want is a level playing field."