Let’s dwell on brighter notes
Deepavali or Diwali, the festival of lights, is a time when we forget our anxieties and problems and look at the positives to enjoy the day, sharing our happiness with others. So, let us look at the encouraging developments in recent days.
The cuts in income tax rates for corporate entities have shored up the bottom line of many companies. And, brightened the prospects for increased investment in the coming years. That has buoyed sentiment in the equity markets. Consequently, many investors feel richer and will hopefully spend more, contributing to revival in demand for goods and services.
Rain has been good this year, raising the prospects of a bumper kharif harvest. With sensible procurement and trade policies, the income of farmers can go up, boosting rural demand for consumer durables and farm implements. The festive season has also added to the demand for consumer goods.
Businesses have offered attractive discounts to lure more buyers and reduce inventory. With lower prices, abundant liquidity in the system and lower interest rates, the fall in demand might be arrested, at least in the short run. The short vacation in some parts of the country in the coming days is likely to help the tourism sector.
Interest rates have been brought down significantly, which means cheaper loans for housing, consumer durables and fresh investment. The lower outgo on interest is expected to show up in more profits for businesses, even if topline growth does not go up by much.
Exporters who have got used to the documentation requirements under the Goods and Services Tax (GST) regime are happy that their refund of taxes paid on export are now automatic and quick. That has significantly improved their working capital. Even the refund of unutilised credit, involving manual intervention, has been speeded, although at some cost for exporters. The government has announced that this refund will also be dealt with online, reducing the need for manual intervention.
The GST law has been suitably amended to allow input tax credit to the extent of 20 per cent of the eligible credit during a period, even in the case of invoices that are not uploaded by suppliers. This is a lot better than not allowing credit till the invoice details appear in the returns uploaded by the supplier. A committee of officers is looking at ways to improve the GST regime.
The Directorate General of Foreign Trade (DGF T) has decided not to impose late cuts on applications under the Merchandise Exports from India Scheme where the original application could not be processed due to system problems and had to be resubmitted after activation of the shipping bill. Similar facilitation measures are being regularly taken by the Customs and DGFT.
India’s ranking in the World Bank’s latest ‘ease of doing business’ report on 190 countries has gone up by 14 notches, from 77 to 63. There are significant improvements in the resolution of insolvencies, dealing with construction permits, trading across borders and registering of property.
This comes on the back of similar improvement by 23 and 30 places, respectively, in the past two years.
Overall, the second half of this financial year promises to be better than the first half. On that note, let me wish you all a Happy Diwali.
Businesses have offered attractive discounts to lure buyers and reduce inventory. With lower prices, abundant liquidity in the system and lower interest rates, the fall in demand might be arrested, at least in the short run