NEW DELHI : Finance Minister Nirmala Sitharaman on Friday announced a slew of measures, including the rollback of big ticket budget announcements, to revive the economy, which clocked its lowest rate of growth in nearly five years in the March quarter and is struggling with lakhs of job cuts across sectors.
She said the government would withdraw higher taxes on foreign portfolio investors, as announced in the Budget, and also withdraw the surcharge on long- and short-term capital gains.
Nirmala Sitharaman also said the government will provide Rs. 70,000 crore worth of recapitalisation to public sector banks upfront, instead of spreading it throughout the year.

The government has decided to withdraw the surcharge on Foreign Portfolio Investors (FPIs). The higher tax applied to individuals and FPIs earning more than Rs. 2 crore annually, which led to a sharp fall in equity markets. Foreign Portfolio Investors have pulled out Rs. 12,105.30 crore from Indian capital markets so far this month. That is on top of the net Rs. 12,418.73 crore they withdrew last month.
The government will also withdraw the enhanced surcharge on short- and long-term capital gains arising from transfer of equity shares. The move to frontload capital injections for state-run banks will help spur fresh loans, the Finance Minister said, adding that banks will also pass on all rate cuts to borrowers.

The Finance Minister also said that Corporate Social Responsibility (CSR) violations will not be treated as a criminal offence. The government had earlier tightened the norms for companies, forcing them to explain where they have spent money allocated for corporate social responsibility.
In a bid to aid the demand for vehicles and revive the auto sector, the government lifted a ban on its departments that restricted them from replacing old vehicles. “Charity begins at home,” the minister said.
To give a major impetus to startups, the government abolished the “angel tax” provisions for businesses registered with the Department for Promotion of Industry and Internal Trade and their investors. The government hoped the new measures will improve the sentiment leading to higher private investment and assuage concerns of portfolio investors, to revive economic growth.

The country’s GDP or gross domestic product grew 5.8 per cent in the January-March period. For the financial year ended March 31, the economy grew at a nearly five-year low pace of 6.8 per cent.
Though Nirmala Sitharaman had earlier declined to comment on the speculations of a stimulus package.
This development came after Moody’s Investors Service on Friday cut India’s GDP growth forecast for 2019 calendar year to 6.2 per cent from the previous estimation of 6.8 per cent. For 2020 calendar year, it reduced the estimate by a similar measure to 6.7 per cent.
Major demands of the slowdown-hit industries, especially automobile, FMCG (Fast-Moving Consumer Goods), include a reduction in the GST (Goods and Services Tax) and the rollback of the super-rich tax for FPIs (Foreign Portfolio Investors).

The decision to revoke surcharge on domestic and foreign investors will be applicable from the current financial year; the necessary approvals will come in due time, says Revenue Secretary Ajay Bhushan Pandey. Will soon come forth with measures to help homebuyers that the govt is working on, says the FM.

Meanwhile, senior Congress leader Manish Tewari said, “The silence of the Prime Minister and the Finance Minister is deafening.”
He said the country is witnessing the politics of vendetta and an unprecedented and undeclared emergency-like situation. Slamming the government, Tewari said, “The government does not have a clue about how to handle this economic crisis, which is intensifying every day in the country.”
Hitting out at the government, Tewari said, “Rajiv Kumar deserves to be congratulated for his confession. He says the current stress in the financial sector is unprecedented.” Manish Tewari said that this confession requires a slight amendment. “It’s not just the financial sector, it’s the Indian economy. The current situation in the Indian economy is unprecedented, something of the sort that has not been seen in the past 70 years.”
Kumar’s comments have come at a time when the country’s economy is facing the worst pace of growth in nearly five years. “This is the making of the BJP led NDA government in the past five years,” Tewari said, adding, “If you look at some of the figures which stare you in the face, over three crore people are currently facing a threat of becoming unemployed.”The Congress leader said every sector of the economy is under grave stress.
Tewari said that Alan Greenspan, ex chairperson of the Federal Reserve in the US had created Greenspan index, which premised that if there is a crisis in the inner-wear industry, it means that the economy is on the brink of implosion.(With Agency Inputs ).

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