Past few months have not been among the good times for global economy. Economic crisis which originated from Europe, gradually spreading to USA and Asian economies have led to a big slowdown in economic growth worldwide. So far, India has been doing good compared to other economies because of strong internal demands and good fundamentals of growth from within Indian economy. However, looking at the Indian economy alone, it seems to be impacted as the rate of growth is gradually reducing. There are multiple factors for it, one of them being less inflow of funds invested in stocks. Securities Transactions Tax (or STT) which was introduced by Finance Minister P Chidambaram in the year 2006 is proving to be an impeding factor to the transactions in Indian stock markets both by Indian as well as foreign investors.
SEBI Chairman has urged to the Finance Ministry to reconsider and revisit the STT so as to stimulate more transaction and money inflows to the stock exchanges and equity markets in India. There is no official word from the Finance Ministry of when and how much or at all if there will be any reduction, but considering the present financial dynamics, the Finance Ministry may decide on reducing the STT in some or all the cases in which it is applicable. We have our fingers crossed and hope that the STT reduces or is removed bringing a lot of enthusiasm for investors to make new investments and lift the market sentiments.
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