New Delhi: A day after NITI Aayog chairman Rajiv Kumar described the liquidity crisis in financial sector as “unprecedented”, Union Finance Minister Nirmala Sitharaman has announced a series of measures, including rollback of key budget announcements, to rev up the economy.
In fact, the finance minister made so many announcements that it looked like another budget presentation. In nutshell, she has made bank loans cheaper, tried to kick start the auto sector and withdrawn the super-rich surcharge on foreign portfolio investment; there will be no angel tax on start-ups and their investors and no more surcharge on long and short term capital gains either.
She, however, started off by claiming that India's growth rate was still far higher compared to many countries liked the United States and Germany, even while stressing that the government has not lost the momentum on reforms.
She spoke with a presentation of 32 slides on the economy prepared by her ministry. The rollback came weeks after FPIs turned net sellers and are estimated to have pulled out about Rs 8,500 crore since the budget announcement on the surcharge.
Come October 1 and the assessees won't get notices and summons from anybody in the Income Tax Department. No more harassment.On or after that date, all notices, summons and orders shall be issued only through a centralised computer system that will mark them with unique Document Identification Number (DIN).
Disclosing this at a Press conference here on the state of economy, Finance Minister Nirmala Sitharaman said you can ignore any communication without DIN.
She also announced that from October 1, all notices will be disposed of within three months from the date of reply. As regards all old notices, she said they will be either decided by October 1 or uploaded again through the centralised system.
In yet another gesture to the "wealth creators" -- as industrialists are being described -- the finance minister announced that the CSR (Corporate Social Responsibility) will be treated as civil liability and not a criminal offence, thereby banishing the fear of jail term for violation.
As for the common man, she promised more credit support for purchase of houses, vehicles and consumption goods. She, however, stopped short of promising anything to the home buyers but promised one more set of announcements next week and another a week thereafter.
There will be reduced EMI for housing loans and vehicle loans since the banks are directly linking Repo rate to the capital loans to the industry, she said.
The finance minister is more concerned about the MSMEs (mini, small and medium enterprises) as she promised them prompt payments from government and public sector units that will be monitored by the cabinet secretary; also, they will get more bank loans from the public sector banks (PSBs).
The government will also lay down a clear definition of MSMEs. The liquidity of the PSBs has been enhanced by the government, which will mean easy loans to MSMEs, small traders and self-help groups.
Besides upfront release of Rs 70,000 crore, the finance minister announced another dose of Rs 5 lakh crore capital investment in PSBs to benefit corporates, retail borrowers and traders.
Her hope is that the PSBs with better liquidity will fast-track collaboration with the NBFCs for loans to MSMEs, small traders and self-help groups.She was also happy to announce that the banks have decided to pass on to the borrowers the rate of reduction by the RBI.
Sitharaman also announced one-time loan settlement through a check box approach to help MSMEs and retail borrowers. She also announced that banks will return the documents of the borrowers within 15 days of the loan closures.
This will help those who mortgage properties for loans.As regards MSMEs and traders in general, she announced that all old GST refunds will be cleared within the next 30 days and as a rule all new refunds will be ensured within 60 days.
To boost the demand of the automobile industry, the finance minister announced lifting of ban on the government departments for purchase of vehicles for replacing the old ones.
Other gestures to the automobile industry include no revision of the one-time registration fee till June 2020. She also said the NBFCs (non-banking finance companies) can use the Aadhaar authenticated bank KYC to avoid duplication.