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Nirmala Sitharaman says all is well with economy, key announcements

India Today logo India Today 23-08-2019 India Today Web Desk

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(Provided by The Times of India)

Union Finance Minister Nirmala Sitharaman today dismissed all talks about economic slowdown. Sitharaman said India's economy is growing at a faster rate than any other major world economy. At a press conference in New Delhi, Nirmala Sitharaman and senior officers of the finance ministry announced a host of measures to boost the country's economy.

The focus of her press conference appeared to be investment, both foreign and domestic. Nirmala Sitharaman announced rollback of the surcharge on super rich and long and short term capital gains. The surcharge had been announced in the Union Budget earlier.

It was estimated that the surcharge affected foreign portfolio investors (FPIs) adversely. The FPIs have withdrawn Rs 23,000 crore from domestic markets post-Budget. The Budget announcement of surcharge on higher tax-income groups reportedly affected 40 per cent of FPIs.

© REUTERS/Amit Dave The Budget announcement of the surcharge had pushed the effective income tax rate for individuals with taxable income of Rs 2-5 crore up to 39 per cent from 35.88 per cent and for those above Rs 5 crore to 42.7 per cent. "Pre-Budget position is restored," Nirmala Sitharaman said.

Sitharaman announced a booster investment of Rs 100 lakh crore on building modern infrastructure over the next five years. An inter-ministerial task force will be formed to push infrastructure projects which the government hopes will boost growth and create jobs.

To address liquidity crunch, the government will infuse upfront Rs 70,000 crore into public sector banks, Sitharaman said. She said the move will enable release of Rs 5 lakh crore in the market.

All tax notices to be issued from centralised system to 'end harassment of taxpayers'. All old tax notices will be decided by October 1 or will be uploaded again through the centralised system.

In another important announcement, Sitharaman tried to allay concerns over alleged harassment of taxpayers saying that from October 1, all notices, summons, and orders of the Income Tax Department will be issued through a centralised computer system. It will also have a computer generated unique Document Identification Number (DIN), she said.

Withdrawal of enhanced surcharge levied on FPIs announced, restoring pre-Budget position. It is being done to encourage investment in the capital market, the finance minister said.

On goods and services tax (GST), Sitharaman said all pending GST refund due to micro, small and medium enterprises (MSMEs) will be paid within 30 days. In future, GST refund on new application will be paid within 60 days.

Decline in consumption has been held as the major reason for economic slowdown -- which Sitharaman however dismissed saying India is on fast track of growth while the global economy is slowing down. To boost consumption, Sitharaman announced a slew of measures for cheaper loans and increase government expenditure.

Banks will offer cheaper loans for purchasing vehicles, houses and consumer goods. The non-banking financial companies (NBFCs) can use Aadhaar-enabled KYC for onboarding customers.

Nirmala Sitharaman also announced revoking ban on the purchase of vehicles by government departments, which will now replace their old vehicles with new ones. The auto sector is facing its worst crisis in almost 20 years. Sales of cars, tractors and other vehicles have been declining for months.

Sitharaman made another significant announcement with regard to non-compliance of corporate social responsibility (CSR). She said violations of CSR norms under the companies aw will not be a criminal offence. It will be treated only as a civil liability.

Industry had expressed concerns over penal provisions for non-compliance with CSR requirements in the amended Companies Act, 2013. The amended law requires certain class of profitable companies to shell out at least two per cent of their three-year annual average net profit towards CSR activities.

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