Two of India’s most outspoken market veterans — Ajay Bagga and Shankar Sharma — locked horns on X over what’s really weighing on Dalal Street: high taxes or sluggish growth.
Bagga fired the first shot, blaming India’s heavy-handed taxation for choking sentiment. “We will soon complete 13 months of the Nifty being below its all-time high… The golden goose is being butchered in the quest to extract the maximum from the 5-6 crore investors/traders/affluent,” he wrote in a post on X (formerly Twitter).
He pointed to South Korea as a contrast, where proposed capital gains taxes were shelved, boosting sentiment and fuelling record highs. Bagga argued that Indian investors are being drained by multiple levies — from STT, capital gains and dividends, to buyback taxes, stamp duty, SEBI fees and more.
“Even if investors don’t make money, they have to pay all these fixed charges,” he said, adding that lower taxes, not higher ones, would ultimately lift government revenues.
The Real Problem: Shankar Sharma Analyses
But Shankar Sharma was quick to counter. In his view, Bagga is barking up the wrong tree. “Relocating to anywhere in the world does not get you rid of stock market taxes in India. You pay exactly what a resident Indian pays,” he replied to the X post.
For Sharma, the problem isn’t taxation — it’s growth. “The market is not negative because of taxes. It is negative because of poor growth. Whatever growth we are getting has been a function of high government Capex. In reasonable part, the money for that is coming from the stock market taxes,” he argued.
Cutting those taxes, Sharma warned, could backfire: “If you reduce the stock market taxes, you will not have enough capital to spend on capital expenditure, which in turn will reduce growth, which in turn will reduce stock market performance.”
Sharma also took aim at what he called the “stockmarketification” of India’s fisc. “We are now heavily reliant on a very volatile & short-term source of capital and are using that to fund long-dated capex. If a company were to do this, we would be shorting it,” Sharma said, reminding that India has grown 8–10% in the past without leaning so heavily on stock market levies.
The exchange has sparked debate among investors: is India taxing its way into a sentiment crisis, as Bagga suggests, or is the drag more fundamental, as Sharma insists?
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