Union Budget 2026 QUOTE:: Shriram General Insurance & Navi AMC

QUOTE 1:

By Mr. Ashwani Dhanawat, Executive Director and Chief Investment Officer, Shriram General Insurance.

“A growth-focused, simplification-heavy budget with strong welfare and infra underpinnings

The 2026-27 Union Budget, delivered from Kartavya Bhavan under the guiding principles of the three Kartavyas, delivers a robust, reform-oriented roadmap for Viksit Bharat. It sustains high capex momentum (up to ₹12.2 lakh crore), accelerates manufacturing in frontier sectors (e.g., ISM 2.0 with ₹40,000 crore, BioPharma Shakti at ₹10,000 crore), rejuvenates legacy clusters, champions MSMEs through equity funds and liquidity tweaks, and pushes infrastructure with high-speed rail corridors, waterways, and city economic regions.

Specifically for general insurance industry, the compassionate exemption of TDS (and full tax) on Motor Accident Claims Tribunal interest awards stands out as a victim-friendly relief, ensuring faster, untaxed access to compensation for those in distress— a thoughtful step toward ease of living.

A particularly positive move for investors and corporates is the revised taxation of share buybacks: proceeds are now taxed as capital gains for all shareholders, addressing past anomalies and aligning buybacks more equitably with other equity distributions. This promotes fairness for minority shareholders while curbing potential tax arbitrage—corporate promoters face an effective 22% rate, non-corporate at 30% via additional levies. Overall, it streamlines corporate capital allocation, reduces differential treatment, and could encourage more transparent shareholder returns without excessive complexity.

On the flip side, the hike in Securities Transaction Tax (STT) on futures and options—futures to 0.05% (from 0.02%) and options premium/exercise to 0.15% (from 0.1%/0.125%)—is a negative for active traders and the derivatives ecosystem. It raises transaction costs, potentially curbing speculative volumes, impacting liquidity in F&O, and contributing to immediate market pressure (e.g., Sensex/Nifty drops post-announcement). While aimed at moderating excessive derivatives activity and boosting revenue, it could dampen retail participation in a bull phase and affect broking revenues short-term.

Net-net, this is a growth-focused, simplification-heavy budget with strong welfare and infra underpinnings—balanced by prudent revenue measures. The buyback tweak is a clear win for equity market health, while the STT increase tempers enthusiasm in high-frequency trading circles. Execution and market adaptation will define its success in the coming year.”

QUOTE 2:

By Mr. Aditya Mulki, CEO, Navi AMC Ltd

 

“Overall the budget has prioritized all the right initiatives from fiscal responsibility, continued capital expenditure to a rare earth corridor and the market reaction is much more of a knee jerk reaction in our view to the increase in STT on futures and no decrease in capital gains tax.  

NRI and PROI (Persons resident outside India) limits increased to 10% of the paid-up capital of an Indian listed company (previously 5%). The combined cap for all such individual investors in a single company has been raised to 24% (previously 10%).

This is a move in the right direction and to an extent expected to negate the impact of FII outflows which has led to the rupee deteriorating sharply against the USD.  Unlike institutional FPIs, which often “exit” en masse during global shocks, NRIs tend to have a longer-term investment horizon and could act as a cushion to FII outflows.

The government fulfilled its commitment made in 2021–22 to reduce the fiscal deficit below 4.5% of GDP by 2025–26. The fiscal deficit for 2025–26 is estimated at 4.4% of GDP. For 2026–27, the fiscal deficit is expected to further decline to 4.3% of GDP.

Impact This signals a transition to long term fiscal stability. Lowering the fiscal deficit while maintaining its infrastructure push will help in driving GDP growth. This also makes the country attractive for FPI investments as it signals fiscal responsibility and long tern currency stability.

In very short “the budget is a structurally responsible one and not one on rhetoric. In the long run this should be structurally positive for equities, and we are not too worried about the short term reaction”.