Investment should be encouraged not speculative trading: Nilesh Shah

Kolkata, Jul 5 (PTI) Steps are needed to curb speculative trading and develop a culture of investing for the long term, said Nilesh Shah, a part-time member of the Economic Advisory Council to the Prime Minister (EAC-PM).

Shah, also the managing director of Kotak Mahindra Asset Management Company Ltd, highlighted how long-term capital investment can create wealth for retail investors and Indian companies.

“We should discourage (speculative) trading so that investment thrives. People lose money. If the government is considering higher taxation for futures and options or speculative trading, it is heading in the right direction,” Shah told PTI.

He was responding to a query about media speculations that the Ministry of Finance is planning to impose higher taxes on transactions for futures & options (F&O) in the upcoming Union Budget.

According to media speculations, proposed changes may include reclassifying these transactions as speculative income from non-speculative business income and potentially introducing TDS on them.

In his presentation, Shah equated futures and options with cryptocurrencies, online games, and Ponzi schemes.

He pointed out that a section of people is “losing money for indulging in wrong money-growing ideas of playing online fantasy games and investing in Ponzi schemes”.

Additionally, 9 out of 10 traders in India lose money in the F&O segment, he said.

Shah was speaking on the sidelines of an interactive session organised here by the Calcutta Chamber of Commerce on Thursday evening.

He also stated that many Indians remain poor because they generate returns lower than inflation due to poor investment decisions.

This situation affects around 18 crore people in the country, he said.

Shah was optimistic about the country’s growth trajectory, its immense potential and the opportunities, amid several challenges.

In his pre-budget memorandum to the Central Board of Direct Taxes, Association of National Exchanges Members of India (ANMI) president Vinod Kumar Goyal suggested treating the income/loss arising from transactions (non-delivery based) which are squared up on the same day at par with business income and not as speculative income.