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Friday 10 July 2020

Sitharaman announces 28 economy boosters including relief to small taxpayers

This was the fourth press conference of Union Finance Minister Nirmala Sitharaman post-Budget; here, the thrusts were on boosters and reliefs

New Delhi: Finance Minister Nirmala Sitharaman in her fourth post-Budget press conference made 28 big announcements on Saturday to boost the sentiment of small taxpayers, homebuyers and exporters. Minister of State for Finance Anurag Thakur was present during the presentation, too.

The finance minister said that inflation had come down significantly — well below the 4% target given to the RBI — which was a big achievement. Whereas small homebuyers will get a discount on buying a house up to Rs 45 lakh, small taxpayers will not be prosecuted for default involving a small amount after filing income tax returns. Apart from this, the government will provide assistance of Rs 10,000 crore to complete all stranded projects.

Sitharaman said there were clear signs of improvement in industrial production. She said, although retail inflation rose slightly to 3.21% in August, it was now within the prescribed range.

Sitharaman said that despite all the concerns related to industrial production in the fourth quarter of 2018-19, until July 2019 the economy saw clear signs of improvement. She said that the impact of the announcement of steps to improve the flow of credit to non-banking financial companies (NBFCs), including the partial credit guarantee scheme, had started showing. “Many NBFCs have benefited,” she said.

The finance minister said that on 19 September, a day before the GST Council meeting in Goa, she would meet the heads of public banks to review the credit flow in the economy.

Key observations by Sitharaman

  1. Inflation below 4%
  2. Increase in foreign investment
  3. Increase in foreign exchange reserves
  4. Banks have reduced interest rates
  5. Heads of banks to meet on 19 September
  6. Focus on home buyers and tax reforms
  7. Notification for faceless assessment in income tax to start soon
  8. Notification for DIN issued
  9. Industrial production increasing
  10. Small taxpayers not to be punished for little income tax defaults
  11. Collegium to sanction tax disputes worth less than Rs 25 lakh
  12. Current account deficit under control
  13. One can apply for compounding by 31 December
  14. Changes made in the policy to increase exports
  15. Declaration of export duty reduction and emphasis on promoting exports
  16. MEIS in the textile industry to end on 31 December; the new policy to be applicable 1 January 2020 onwards
  17. Foreign direct investment has increased
  18. Input tax credit to be fully refunded electronically
  19. Insurance to be given on export credit
  20. Government has taken several steps to increase exports
  21. Mega shopping festival for gems and jewellery, yoga and tourism, textile and leather sectors to be held in the country to boost consumer interest: The mega shopping festival will be held at four venues across the country, beginning March 2020
  22. Approval to sell handicrafts through e-commerce portals to increase exports
  23. An additional incentive of Rs 1.5 lakh to be given to promote affordable housing; exemption on buying houses costing up to Rs 45 lakh to be applicable till March 2020
  24. Real estate companies to get up to Rs 10,000 crore under certain conditions; this help will be given to companies with no NPA with banks and case pending in any court
  25. Help to complete stranded projects: Apart from the government, investors like LIC to invest in it; however, this money will be given to such projects alone whose work has been completed up to 60%, provided the banks are not burdened with their NPA
  26. Government employees to be encouraged to buy houses
  27. RoDTEP (Remission of Duties or Taxes on Export Product) to replace MEIS (Merchandise Exports from India Scheme); MEIS in textiles to remain in force till the end of this year; the new RoDTEP’s benefits are worth Rs 50,000 crore
  28. The old Rebate of State Levies (ROSL) to continue till December 2019

Four press conferences post-Budget

In the past one month, the finance minister had held three press conferences. In the last three, she made many big announcements. These included statements such as the merger of banks, exemption of tax to FPIs and attributing Ola-Uber to the slowdown in the auto sector. It was expected that in this press conference the government would offer relief to the business class and the general public alike by announcing big steps to address the slowdown in real estate and exports. Maruti-Suzuki had taken exception to the finance minister’s attribution of the slowdown in the auto sector to taxi services.

The first post-Budget conference was held on 23 August. After the Budget on 5 July, the stock market saw a steady decline as the finance minister had announced the imposition of capital gains tax on foreign institutional investors. Sitharaman then made an announcement to abolish this tax.

Sitharaman announced in this press conference that violations in the norms of corporate social responsibility would not be treated as a criminal offence.

Sitharaman said all tax assessment work would be completed within three months. Section 56 2 (b) of the Income Tax will not apply while the startup is registered. Along with this, the angel tax for startups was abolished.

Announcing some relief for the banking sector, the finance minister said that Rs 70,000 crore had been approved for the banks. With this, banks will be able to distribute loans worth Rs 5 lakh crore. She said banks would cut their Marginal Cost of Funds based Lending Rate (MCLR) so that customers could get the benefit of reduction in repo rate. Banks then decided they would launch repo-linked linked products. Sitharaman said that the government-run banks would return the document to the customers within 15 days of the loan closure.

Sitharaman said in that press conference that the economy was in better shape. There is no condition worse in India than in the world. There is an uproar all over the world. Many institutions say that global demand is weakening. In the US and Germany, she said, the yield curves had turned upside down. It was clear, she said, from this that consumption had decreased in these countries.

The second press conference was held on 30 August. In this, the finance minister made a big announcement, merging six state-owned banks out of 18 public sector banks in the country.

Sitharaman announced that Punjab National Bank would merge with Oriental Bank of Commerce and United Bank. This will be the second-largest government bank, 1.5 times larger than the current PNB. Canara Bank will merge with Syndicate Bank, which will be the fourth largest bank in the country. Allahabad Bank has merged with Indian Bank. Apart from this, Union Bank, Andhra Bank and Corporation Bank will merge, which will become the fifth-largest state-run bank in the country.

The third press conference was held by the finance minister on 10 September in Chennai. This was presented as a report card of Narendra Modi government’s 100-day tenure. However, this press conference grabbed news headlines for the wrong reason. The Finance Minister blamed taxi service aggregators like Ola and Uber in urban areas for the slowdown in the automobile sector. In urban areas, people have started liking Ola-Uber instead of driving their cars, she said. Sitharaman had said that the auto sector was more affected due to BSVI and people’s thinking. Now people are more fond of using the services of Ola and Uber cabs, she had remarked. Sitharaman became a butt of jokes on social media due to this comment.

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