From housing to auto sector, Sitharaman announces slew of measures to boost economy
New Delhi, Aug 23: Union Finance Minister Nirmala Sitharaman on Friday announced a series of measure to give a much needed stimulus to the economy. She announced many steps that the government would take across sectors to boost economic growth.
The Finance Minister proposed to establish an organisation to provide credit enhancement for infrastructure and housing projects with an aim to enhance fund flows towards such projects. Announcing steps to prop up the slowing economy, the minister said that in order to improve domestic bond market, the finance ministry will work with the RBI to make it more conducive for investors and bond issuers, as well as facilitate increased trading for price discovery.
The government will also take further action on development of credit default swap markets in consultation with the Reserve Bank and market regulator SEBI. The minister also outlined steps like labour reforms, amendment to the bankruptcy law to increase investments.
Sitharaman on auto-sector:
In a bid to arrest the slowdown in automotive sector, the Finance Minister said that the main focus would be the automotive ancilliary units which need impetus. She said that there is no need to fear that since the government is pushing for Electrical Vehicles, there would be curbs on conventional vehicles.
"BS-4 vehicles purchased up to March 31, 2020, will all remain operational for their entire period of registration," she said allaying the fears.
She gave a brief a picture of what is happening globally. Sitharaman said that global GDP growth is slowing down, but compared to many countries, India's position is far better.
"Just to give you briefly a picture of what is happening globally. The current projected global GDP growth is of about 3.2 percent and probably is going to be even revised downwards...The growth rate, still in comparison to many countries is high and if anything even in comparison to the US and China, our growth rate is higher than everybody else," she said.
Moreover, many organisations have said that global demand will be weak, she added.
Sitharaman on GST refunds:
In a major relief to the MSME sector facing liquidity shortage, the government on Friday announced that all their pending GST refunds will be paid within 30 days. Also, in future, all GST refunds of micro, small and medium enterprises (MSMEs) will be paid within 60 days from the date of application, Finance Minister Nirmala Sitharaman said while announcing a slew of measures to boost growth.
The minister also said the decision on recommendations of the U K Sinha Committee regarding ease of credit, marketing, technology and delayed payments to MSMEs will be taken within 30 days. The government would also consider amendment to the MSME Act to move towards a single definition. The MSME sector, which accounts for about 29 per cent of the gross domestic product (GDP), is one of the largest job creators in the country.
Sitharaman said the working capital loans will be made cheaper. "pending payments, except those that are under litigation," she says.
"There will be faceless scrutiny from 'Vijay Dashmi' this year, which will mean that there shall not be even, that one odd over-enthusiastic officer who might go and sit & talk about things, which may be construed as harassment," stated the FM.
FM will hold a meeting with GSTN personnel on Sunday to understand where the glitches are that are hampering flow of refunds.
Govt withdraws surcharge on long-term and short-term capital gain:
Sitharaman announced the much-awaited relief from enhanced surcharge on long-term and short-term capital gain.
Buckling under pressure from overseas investors, the government on Friday rolled back the enhanced surcharge imposed on foreign portfolio and domestic investors in Budget 2019-20 as it announced a slew of measures to boost sagging economic growth.
"In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by Finance (No.2) Act, 2019 on long/short term capital gains arising from the transfer of equity shares/units," Finance Minister Nirmala Sitharaman told reporters.
The move will dent government revenues by Rs 1,400 crore. Sitharaman had in her maiden Budget hiked the surcharge on income tax paid by super-rich individuals.
"CSR violations will not be treated as a criminal offence and instead be as civil liabilities. On or after 1st October 2019 all the Income-tax orders, notices, summons, letters, etc shall be issued through a centralised computer system," said FM.
NITI Aayog Vice-Chairman Rajiv Kumar: I would request the media to stop misinterpreting my statement. The government has been taking bold steps to accelerate our economy & will continue to do so. There is no need to panic or spread panic. pic.twitter.com/kXvsYCaMmt— ANI (@ANI) August 23, 2019
The FM's announcements come at a time when ratings agency Moody's recently lowered India's GDP growth forecast to 6.2 percent from 6.8 percent for 2019.
From the financial crisis in the NBFC (non-banking finance company) sector to a huge decline in auto sales, the industries are in dire need of stimulus package to bounce back from the economic slowdown.
Reportedly, the GDP growth has drop down from a peak of 8.2 per cent in 2016-17 to 5.8 per cent in the fourth quarter of 2018-19. The first quarter of 2019-20 is expected to dip further to 5.6 per cent.