Updated: August 23, 2019 10:27:09 pm
Attempting to allay concerns on the economic slowdown, Finance Minister Nirmala Sitharaman Friday announced an array of measures to revive the economic growth. India’s growth rate continues to grow higher in comparison to many countries, the Finance Minister said, adding that the GDP growth may be revised downwards from the current estimate of 3.2 per cent.
Sitharaman’s set of announcements came at a time when Moody’s Investors Service, earlier today, revised downwards India’s GDP growth forecast for the current year to 6.2 per cent, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions.
Among key measures that were announced include treating CSR violations as civil liability and not as a criminal offence, rolling back enhanced surcharge on foreign and domestic investors, withdrawal of Angel tax provisions for startups and their investors.
The Finance Ministry also announced that banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly instalments for housing, vehicle and other retail loans. Besides, the minister announced additional liquidity support of Rs 20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to Rs 30,000 crore. READ | Decoding Nirmala Sitharaman’s measures to revive economic growth
To boost lending and improve liquidity situation, Sitharaman also announced upfront capital infusion of Rs 70,000 crore into public sector banks. The move is expected to generate additional lending and liquidity in the financial system to the tune of Rs 5 lakh crore, said Sitharaman.
Sitharaman also announced relief measures for the micro, small and medium enterprises (MSMEs) sector facing liquidity shortage. She said all pending GST refunds of MSMEs will be paid within 30 days. She added that 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.
In a bid to address the slowdown in the auto sector, the government allowed an additional 15 per cent depreciation on vehicles acquired from now till March 2020. The Centre also lifted the ban on purchase of new vehicles for replacing all old vehicles by government departments, and consider various measures including scrappage policy to boost demand. Sitharaman also announced that BS-IV vehicles purchased up to March 2020 will remain operational for the entire period of registration.
Aside from announcing a partial rollback of the enhanced surcharge on foreign portfolio investors (FPI) levied in the Budget, Sitharaman indicated a review of the surcharge levy for high net worth individuals as well.
The government has also decided to make necessary changes in PMLA rules and Aadhaar regulations to ease the lending process. The minister said that NBFCs will be permitted to use the Aadhaar authenticated bank ‘Know Your Customer’ (KYC) to avoid repeated processes. The Ministry further announced measures to address complaints of harassment on issuing of Income Tax notices and orders by tax authorities.
“On or after October 1, 2019, all notices, summons, orders, etc by the income-tax authorities shall be issued through a centralised computer system and will contain a computer-generated unique Document Identification Numberm,” said Sitharaman.
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