Dear Middle Class

Rarely tweet at this time. When my sleep got disturbed, I looked at the phone. Microsoft is laying off 60,000 employees, 27% of its workforce across the world. This includes India as well. The term used is Voluntary Exit Offers (VEOs). Mails are already out to these employees. They are offered some separation benefits and asked to leave. Usually what happens in the industry is that if they don’t accept the voluntary exit offer, they are subsequently laid off. When you get laid off, separation benefits are not provided. Though called voluntary, in all likelihood these 60,000 people would have no option but to leave the company. At least from now on, the Finance Minister should consider not taxing severance benefits. Suddenly overnight, a huge number of employees in one of the world’s largest companies are facing an uncertain future. Already Oracle, including their Indian operations, has laid off a huge number of people. The trend is expected to follow. At least now you would understand why I’ve been saying for the last couple of years to create safe money worth 3 years of living expenses and not to go for any loans, including buying a house. The impact of IT professionals losing jobs would start showing on premium consumption, real estate prices and reduced demand across the economy. As I said, things would become worse before they become better. Newer industries and opportunities would come in the future. But the transition period is going to be painful.

‘I told you so’ is not something to mention cheerfully, especially when what was said is negative. From the time long term capital gains tax was brought back, I have been tirelessly pointing out how unfair it is to have both STT and long term capital gains tax. Even when I was a BJP supporter, I criticised how disastrous the 2019 budget was. From that time, I have been consistent in saying that Nirmala Sitharaman is unfit to be a finance minister. She reduced corporate tax but kept the individual tax rate as it is. In fact, the individual tax rate went as high as 42 percent and is now around 39 percent. Income tax is paid by a tiny fraction of the population. Still, the amount they pay is more than what all corporates in India put together pay. Individuals paying cumulatively more than corporates started only during the period of the current Finance Minister. This is a travesty of justice. This government has no clue about capital markets or risk capital. Prime Minister’s most trusted officer Hasmukh Adhia said making profits from markets requires no effort. Then why do very few create wealth and most get wiped out from capital markets? Neither Hasmukh Adhia nor Nirmala Sitharaman would have ever invested even a single rupee in capital markets. All asset classes are not equal because the nature of risk is different. In a capital starved country, risk capital needs to be incentivised. For those who say it is only the secondary market, without ease of entry and exit in secondary markets, the primary market would cease to exist. And without that, there would be zero risk capital. The odds of success in trading are already very low. The government has kept increasing STT, making trading unviable. The government simply does not understand that trading provides two important things for markets: liquidity and price discovery. Without liquidity and price discovery, secondary markets would become practically useless. Even in 2024, after NDA won the elections, I tagged the Prime Minister multiple times stating that anyone other than Nirmala Sitharaman should be considered for Finance Minister because she would prove to be economically disastrous for the country. And unfortunately, I am proven right. The Finance Ministry is only good at setting narratives like poverty has been rooted out in India, we would become a developed superpower by 2047, and the latest narrative of how economically powerful we are becoming on a PPP basis. I have repeatedly shown with data and facts how every single narrative is false and disconnected from reality. The Finance Ministry lives in a completely different reality. Even developed nations understand how important foreign capital is. But our finance minister said in Parliament it is ok if foreign capital goes away because we have domestic retail investors. Certain statements are coming back to haunt us. As I have said in the past, it is not that this government did not do anything positive. But given the huge mandate, the last twelve years are wasted opportunities on an overall basis. And the contribution of the Finance Ministry to these wasted opportunities is significant. For many years, I have been trolled, criticised, and abused for questioning the finance minister and the government’s economic policies. Now every well meaning individual realises how disastrous the Finance Minister has been for both the economy and capital markets. My views stand vindicated now. Still, you do not feel happy when your negative views come true.