Govt readies next round of measures on economy

WITH LIQUIDITY NO LONGER A MAJOR AREA OF CONCERN, THE GOVERNMENT COULD NOW SHIFT ITS FOCUS TO FUELLING DEMAND AND STOKING CONSUMPTION, SAID AN OFFICIAL

NEW DELHI: The Prime Minister’s Office (PMO) and top officials of the finance ministry are working on administrative measures and incentive packages to boost the sluggish economy as the government is “deeply” concerned about the steep fall in key economic parameters besides dwindling revenue collections, three officials aware of the developments have said.

The PMO and the North Block have been conducting a series of meetings with central and state government officials to boost revenue generation, which is a necessary condition for prospective stimulus packages to create demand and induce consumption to boost the economy, they said.

One of the officials said that liquidity is no longer a major concern and the government has addressed investors’ sentiments by announcing unprecedented cuts in corporate tax rates by sacrificing ₹1.45 lakh crore. The government could now shift its focus to fuelling demand and stoking consumption, he said on condition of anonymity.

On the demand side, discussions are centred around reducing income tax rates sans exemptions, prodding banks to offer attractive EMIS for auto and housing loans, rejigging real estate laws and tax structure and reducing compliance cost for builders on the condition that the same could be passed on to consumers, the official said.

The government is also exploring some incentive to perk up automobile sales, the official added. It is, however, finding it difficult to cut Goods and Services Tax (GST) on automobiles because states are unwilling to take about ₹60,000-crore revenue hit, he said. Other proposals being discussed include raising public investments in infrastructure, particularly in rural areas, and asking state-run firms to front-load their budgeted expenditure, he added.

The government is expecting demand to pick up because of some recent decisions. The cabinet on October 9 raised dearness allowance (DA) of five million central government employees