Economic Measures to Boost Economy
Recently, the Finance Minister had announced a slew of economic measures, which not only seek to revive economic growth (through fiscal stimulus) but also promised to end tax terrorism.
- These measures were brought in the backdrop of the economic slowdown in India
- The slowdown was also reflected by the major international economic institution which downgraded India's growth forecast,
- For example, Moody’s Investors Service pared India’s growth estimate from 6.8% to 6.2% in the current fiscal year.
Economic Measure |
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- Extra Surcharge that was announced in Budget 2019, on any capital gain from the sale of shares has been scrapped.
- The highest surcharge will thus be restored to the pre-budget level of 15%.
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- The Government will expedite capital infusion of Rs 70,000 crore for public sector banks announced in the budget 2019.
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- It will help banks to lend to firms and buyers, boosting demand for homes and automobiles.
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- Banks will be asked to link their loan rates to the central bank's repo rate
- Currently, the repo rate is 5.4% vs SBI's 1-year MCLR of 8.25%.
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- It will check incomplete transmission of monetary policy and help buyers to get loans cheaper and faster.
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- Startups will be relieved as the angel tax had made it difficult to attract new funding.
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- National housing board will extend additional liquidity of Rs 20,000 crore to 7 housing finance companies, bringing the total support to Rs 30,000 crore.
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- This will help developers starved of funds to complete their stuck projects.
- It will also alleviate the plight of buyers, waiting for years to get their homes.
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- The government is in favour of penalties rather than prosecution, as the earlier provision could attract a jail term of up to three years along with a fine.
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- This will ease liquidity for MSMEs who often have to wait for long to get GST refunds.
- A single definition will remove ambiguity and improve the ease of doing business.
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- NBFCs will be able to access the KYC of customers and onboard them faster.
- Customers will get loans quicker while those lenders will be able to improve their efficiency.
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- These economic measures are being dubbed as mini-budget.
- These are based on the ideology of reform, perform and transform, as highlighted by the Indian Prime Minister.
Source: TH