Finance Minister Nirmala Sitharaman recently gave a speech, a right booster for an economy that is downbeat in growth and sentiment.
What are some highlights from the speech?
Banks to make a home, auto loans cheaper.
Announcement of accelerated depreciation of 15% (in addition to the existing 15%) for all vehicles acquired till March 31, 2020.
BS-IV vehicles purchased up to March 2020 will remain operational for the entire period of registration (i.e.) continuation of old vehicles.
Lifting of ban on government departments for the purchase of vehicles to replace old ones.
All tax notices to be issued from the centralised system. All old tax notices will be decided by October 1 or will be uploaded again through the centralised system.
The enhanced surcharge levied on FPIs was withdrawn, restoring pre-Budget position which could encourage investment in the capital market.
Withdrawal of angel tax on start-ups.
Non-compliance with corporate social responsibility (CSR) norms by companies will be decriminalised.
Government to infuse upfront ₹70,000 crore (announced in the budget) into public sector banks to enable the release of ₹5 lakh crore liquidity in the market.
Banks have decided to pass on rate cuts by RBI to borrowers; launched repo rate or external benchmark-linked loan products.
What issues are addressed?
They address growth slowdown concerns; free up funds for investment and spending by banks, housing finance companies and MSMEs.
It will undo some controversial proposals, in the budget and outside it, which were affecting sentiment in the markets and the corporate sector.
Some of the measures promote the ease of doing business, and the ease of living for ordinary citizens.
The positive measures made for the automobile industry are hoped to be translated into demand.
Banks will have more space to increase their lending consequent to the recapitalisation that they will get from the government.
This, together with the strong push for repo rate linked loan products, is likely to benefit borrowers who buy new homes, vehicles and durables.
The assurance that all pending GST refunds to MSMEs will be paid within 30 days and going forward such refunds will be made within 60 days is a great relief for the sector.
This will ease the cash flows of MSMEs who often work with stretched finances.
If the action on the negative feedback to the FPI tax proposal addressed earlier, much of the confusion in the markets could have been avoided.
She declared upfront that the government respects wealth creators and the measures are aimed at helping them.
