Economy

Centre responds to downturn with steps to boost growth

Union Finance Minister Nirmala Sitharaman addresses a press conference in New Delhi on August 23, 2019.

Union Finance Minister Nirmala Sitharaman addresses a press conference in New Delhi on August 23, 2019.   | Photo Credit: Kamal Narang

Controversial surcharge on Foreign Portfolio Investors withdrawn.

The government on Friday came out on the front foot to try to boost private sector sentiments, with Finance Minister Nirmala Sitharaman announcing a slew of measures to reduce the burden on the sector, including withdrawing the controversial surcharge on Foreign Portfolio Investors (FPIs) and reiterating the Prime Minister’s statement that the government “respects all wealth creators”.

Ms. Sitharaman told a press conference that the government will not treat corporate social responsibility violations as criminal offences, as it had earlier said.

“In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by the Finance Act (No 2) Act 2019 on long and short term capital gains arising from the transfer of equity shares,” the Finance Minister announced. “In other words, the enhanced surcharge on FPIs goes and the pre-Budget position is restored.”

She, however, clarified that the increased surcharge announced in the Budget would still apply to high net-worth individuals earning more than ₹2 crore a year.

 

This, she said, would be the case till India’s 75th Independence Day, when the decision will be reviewed.

In keeping with the overall push to allay private sector concerns, the Finance Minister also stressed that the government was in favour of penalties rather than prosecution. This would also extend to violations of the CSR rules, which it had earlier said could attract a jail term of up to three years along with a fine. The decision had earlier spooked India Inc, and the rollback should now come as a relief.

The government also decided to front-load the ₹70,000 crore of capital infusion in public sector banks that was announced in the Budget, a move aimed at increasing private investment by facilitating greater credit disbursal by the banks. According to the government, this ₹70,000 crore will lead to about ₹5 lakh crore of fresh liquidity that can be loaned out.

Centre responds to downturn with steps to boost growth
 

In what amounts to a short-term bailout of the auto industry, Ms. Sitharaman also announced that the government had rescinded its ban on the purchase of new vehicles by its departments to replace old ones. Vehicles bought till March 31, 2020 will also be eligible for an additional 15% depreciation. The proposal to enhance registration fees for new vehicles will also be kept on hold till June 2020.

Taxmen reined in

The government has also significantly reined in the discretionary powers of the tax authorities. Ms. Sitharaman announced that from October 1 onwards, all notices and summons by the Income Tax Department would be generated by a centralised computer and would carry a unique code.

“I have also held meetings with the tax officials at various locations in the country and told them that our tax collection targets are realistic and that there was no need for overreach,” Ms. Sitharaman said.

Union Finance Minister Nirmala Sitharaman with MoS for Finance Anurag Thakur during an event at the DRDO Bhavan in New Delhi on August 23, 2019.

Union Finance Minister Nirmala Sitharaman with MoS for Finance Anurag Thakur during an event at the DRDO Bhavan in New Delhi on August 23, 2019.   | Photo Credit: R.V. Moorthy

What should cheer prospective homeowners is that the Centre has announced an additional ₹20,000 crore of liquidity to the housing finance companies, over and above the ₹10,000 crore earlier announced.

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Printable version | Feb 18, 2020 9:47:15 PM | https://www.thehindu.com/business/Economy/union-finance-minister-nirmala-sitharaman-address-a-press-conference-in-new-delhi/article29234248.ece

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