Union Home Minister Amit Shah on Friday emphasised that the government is committed to make India a five-trillion-dollar economy.
His comments came after Union Finance Minister Nirmala Sitharaman announced a host of decisions while undoing some previous decisions.
“Announcements by Finance Minister Nirmala Sitharaman only reinforce the fact that Modi 2.0 is committed to make India a 5-trillion dollar economy,” Shah tweeted.
Sitharaman’s decisions have not only made the markets happy but have also given the BJP a much-needed reprieve.
Sitharaman on Friday announced a series of decisions including the rollback of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs) announced in the Union Budget last month.
She promised to come out with two more instalments of relief package in the coming weeks to boost sentiment.
With most engines of growth such as investment, demand, consumption and exports slowing down, the pressure has been mounting on the government to act. The Modi government has come under opposition attack for distress across various sectors that have caused huge job losses.
Much to the relief of the FPIs, the controversial surcharge on them was withdrawn by the government as part of measures to boost economy but not before they pulled out about Rs 8,500 crore from the equity market.
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 transfer of equity shares in Sections 111A and 112, respectively of the Income Tax Act.
The Finance Minister also sought to empower the banks with upfront recapitalisation of Rs 70,000 crore which will induce additional lendings and liquidity to the tune of Rs 5 lakh crore which will benefit corporates, retail borrowers, MSMEs, and small traders who have been hit the maximum due to credit crunch.
She also announced the banks have now decided to pass on rate cuts through MCLR reduction to benefit all borrowers and this will reduce EMIs for housing loans, vehicles and other retail loans by directly linking repo rate to interest rates. The working capital loans for the industry will also get cheaper due to this.
There were also key announcements for the hard-hit auto sector. Bharat Stage IV vehicles purchased before March 2020 will remain operational for the full period of their registration. Sitharaman said she wanted to dismiss speculation that BS-IV vehicles would become illegal to drive after 2020 when BS-VI norms will kick in.
The other major announcement the Finance Minister made with regards to boosting demand was to do with a ban on buying vehicles imposed on government departments. The ban did not allow departments to buy new vehicles even if it was to replace old ones. There will also be an additional 15 per cent depreciation on all vehicles.
In an effort to boost the NBFCs, it was announced that more credit support will be given to the purchase of vehicles, and houses. Additional liquidity support to HFCs by Rs 20,000 crore by NHB is to be given, increasing it to Rs 30,000 crore.
The measures announced also included that all pending GST refunds due to MSMEs will be paid within 30 days and in future, all GST refunds will be paid within 60 days from the date of application.
For increasing capital flows and strengthening financial markets and deepening the bond market, the Finance Minister said the government would soon take further action on development of Credit Default Swap market soon in consultations with the RBI and the SEBI.
There is also a proposal to set up an organisation to provide credit enhancement for infrastructure and housing projects for enhancing debt flow towards such projects.
An inter-ministerial task force will be formed and chaired by Secretary, Economic Affairs, to finalise infra projects. The Budget has announced Rs 100 lakh crore worth of infra projects in the next 5 years.
The Depository Receipt Scheme 2014 is expected to be operationalised soon to give Indian companies more access to foreign funds through ADR and GDR. Finance Ministry is also working with the RBI to bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC soon.
Lauding the finance minister, Assam Finance Minister Himanta Biswa Sarma said that the announcement made by Sitharaman are no ordinary decisions.
“It will have a huge impact in keeping the economy on the right track. Some of the decisions will have an immediate effect. I am extremely happy as Assam’s Finance Minister at the decisions taken today and want to thank the FM,” said Sarma.
Sitharaman’s Cabinet colleague Prakash Javadekar also took to Twitter to congratulate her.