Centre readies booster dose to rev up economy

Thrust on MSME, infra, banks and job creation

NEW DELHI: The government’s expected measures to revive a stuttering economy could mainly target the MSME sector and involve a re-look at public-private project norms to boost investment without breaching its fiscal deficit target for the year, officials involved in the process told HT.

Besides, the government is looking at recapitalisation of banks, issuing infrastructure bonds, and a package to boost manufacturing of electric vehicles in India.

Different ministries are working together to chalk out measures to rev up the ailing economy, once hailed as the “only bright spot” in the world.

In a series of meetings over three days since September 16, Union finance minister Arun Jaitley met ministers Suresh Prabhu and Piyush Goyal, along with officials from the ministries of finance, rail and commerce. Officials from NITI Aayog and PMO were also present.

Earlier this week, the finance minister was quoted as saying that the government has taken note of the economic indicators and measures would soon be taken to address them.

“I have had a series of discussions with some of my ministerial colleagues, secretaries and other experts within the government,” Jaitley told reporters after a cabinet meeting on Wednesday.

He refused to divulge details saying that the plan would first be presented to PM Narendra Modi.

India’s economic growth slumped to a 3-year low of 5.7% in the April-June quarter, which many experts attributed to last year’s demonetisation of 500 and 1,000-rupee notes that sucked out 86% of the currency in circulation from a largely cash-reliant economy. The MSME sector has been in focus as it’s still reeling under the effects of demonetisation and GST.

NEWDELHI: The confusion and frequent alteration of tax rates of products under the goods and services tax (GST) may dent India’s hopes of improving its ranking on the Ease of Doing Business chart brought out by the International Finance Corporation.

Despite the continuous reform process undertaken by the government, India was placed at 130 among 190 countries last year, just one notch above the previous year’s ranking.

One of the major thrust areas of the NDA government was focus on ease of doing business in the country and thereby improving its ranking. The government aimed to be among the top 50 countries in relation to the ease of doing business.

“GST was meant to create one nation one tax but the existing uncertainty over tax rates and the problems faced by the businesses in filing returns will have a direct impact on the ease of doing business index..GST was meant to make things more seamless,” Soumya Kanti Ghosh, chief economic adviser of the State Bank of India group told HT.

A KPMG report said that the industry has to go through the cycle of re-fixing final consumer prices if GST rates are revised within two months of its launch. Besides, businesses that are affected would have to communicate the changes through the supply chain and revise consumer demand projections and realign discounts and marketing policies. “Making changes so often also gives an impression of uncertainty in doing business in India, which had always been a complaint of global businesses,” the report said.

“There is confusion not only over GST rates but also the portal (where businesses need to file their sales records) has not been working and it is unable to take the load, which is creating more problems for the industry and these need to be addressed at the earliest,” Waman Parkhi, partner, indirect tax, KPMG said.

The gross mismanagement has hit medium and small traders the most, as they have no advisors to help them tide over the crisis.