Government introduces measures to revive the slowing Indian Economy

At a press conference held on August 23, 2019, the Union Finance Minister Nirmala Sitharaman and senior officers of the finance ministry announced a host of measures to boost the country's economy. The Finance Minister dismissed all talks about the economic slowdown. Let us take a look at the various measures introduced to revive the Indian Economy :

Surcharge on FPI’s rolled back :

The Budget proposal to hike surcharge on FPIs had spooked foreign investors, who withdrew more than $ 3.4 billion ( INR 24,500 crore) from domestic equities in July and August. The surcharge on domestic and foreign investors was revoked back. The surcharge had been announced in the Union Budget earlier. The government has proposed to increase the surcharge levied on top of the applicable income tax rate from 15% to 25% for those with taxable incomes between Rs 2 crore and Rs 5 crore, and to 37% for those earning more than Rs 5 crore, taking the effective tax rate for them to 39% and 42.74%, respectively..

Rollback of surcharge on LTCG and STCG :

In order to increase the investment in capital market, the enhanced surcharge on LTCG and STCG was rolled back.

Relief for Start-Ups:

The angle tax provisions levied on start-ups and their investors were withdrawn.

Cash Infusion in the Economy:

The Government will infuse upfront  INR 70,000 crore into public sector banks which will in turn enable the release of  INR 5 lakh crore in the market.

Measures to boost the Auto Sector :

1) BS-IV Vehicles purchased till 31/03/2020 to remain operational for the entire period of registration.

2) Revision of one time registration fees being deferred till June 2020.

3) Additional 15% depreciation on all vehicles to increase to 30%, acquired during the period form now to 31/03/2020.

4) Both EVs and ICVs will continue to be registered.

5) Removal of ban on purchase of new vehicles for replacing the old ones by Government.

6) Consideration of Scrappage Policy.

GST Refund for MSME :

All pending GST refund due to MSMEs will be paid within 30 days and in the future, GST refund on the new application will be paid within 60 days.

Cheaper Home, Auto Loans :

Banks will offer cheaper loans for purchasing vehicles, houses and consumer goods.

Boost in Infra Sector :

Investment of INR 100 lakh crore will be done for building modern infrastructure over the next five years.

CSR violation not a criminal offence :

Violations of CSR norms under the Companies Act, 2013 will not be a criminal offence; but will be treated only as a civil liability.

Aadhar based KYC :

Aadhar-based KYC to be permitted for opening Demat accounts and for investing in mutual funds.

Support to NBFCs / HFCs :

>Additional liquidity support was provided by NHB to HFCs of  INR 20,000 crore thereby increasing it to INR 30,000 crore.

>Partial Credit Guarantee Scheme for purchase of pooled assets NBFCs or HFCs upto  INR 1 lakh crore

>Timely Rate Cuts by Banks :

> Rate cuts through MCLR reduction will be passed on by banks to benefit the consumers.

>Return of Loan Documents :

> Loan documents with Banks will be returned within 15 days of loan closure.

>Transparent One Time Settlement Policy :

> Quick One Time Settlement Policy with checklist approach to benefit MSME and Retail Borrowers in settling their overdues.

>Protecting Honest Decision Making :

> Bank Internal Advisory Committee (IAC) decision on vigilance / non-vigilance will be final.

Addressing complaints of harassment by certain Income Tax Authorities :

From October 01, 2019, all notices, summons, and orders of the Income Tax Department will be issued through a Centralised Computer System. It will also have a computer-generated unique Document Identification Number (DIN).Also the Government has set fiscal deficit target of 3.3 per cent of the GDP for the current fiscal year.

Other measures announced to boost the economy include setting up of an entity for credit enhancement for infrastructure and housing projects, a task force to finalise the pipeline of infrastructure projects and simplification of Know Your Client (KYC) procedure to improve market access for foreign investors.