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

NEWDELHI: The Prime Minister’s Office (PMO) and top officials of thefinanceministryareworking onadministrativemeasuresand incentive packages to boost the sluggisheconomyasthegovernment is “deeply” concerned about the steep fall in key economicparametersbesidesdwindling revenue collections, three officials aware of the developments have said.

ThePMOandtheNorthBlock have been conducting a series of meetings with central and state governmentofficialstoboostrevenue generation, which is a necessary condition for prospective stimulus packages to create demandandinduceconsumption to boost the economy, they said.

One of the officials said that liquidityisnolongeramajorconcern and the government has addressedinvestors’sentiments by announcing unprecedented cutsincorporatetaxratesbysacrificing ₹1.45 lakh crore.

The government could now shift its focus to fuelling demand andstokingconsumption,hesaid on condition of anonymity.

On the demand side, discussions are centred around reducingincometaxratessansexemptions, prodding banks to offer attractive equated monthly instalments (EMIs) for auto and housing loans, rejigging real estatelawsandtaxstructureand reducing compliance cost for buildersontheconditionthatthe same could be passed on to consumers, the official said.

Thegovernmentisalsoexploring 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 takeabout₹60,000-crorerevenue hit, he said.

Other proposals being discussed include raising public investments in infrastructure, particularly in rural areas, and asking state-run firms to frontloadtheirbudgetedexpenditure, he added.

The government is expecting demand to pick up because of some recent decisions.