India Inc hails FM steps to boost economy

New Delhi, Aug 23 (IANS) India Inc on Friday welcomed the Central government's move to give a major economic boost to diverse sectors such as NBFCs, auto, housing, MSMEs, equity markets and banking via a slew of measures on tax surcharge, GST refunds, easier loans and demand generation.

At present, India's economy has been impacted by a consumption slowdown which is a culmination of several factors like high GST rates, farm distress, stagnant wages and liquidity constraints.

Besides, inventory pile-up of automobile, and other products at the dealership level has become a problem.

Finance Minister Nirmala Sitharaman on Friday announced major steps such as roll-back of super-rich tax surcharge on FPIs, allowing incremental demand generations and easing of loans to spur growth.

Industry body CII termed the FM's package as a timely response and which showed "a phenomenal attitude where consultations with stakeholders can be translated into well-thought through interventions in a short period".

CII Director General Chandrajit Banerjee said: "The correct diagnosis and understanding of issues coupled with the impactful interventions and measures will go a long way towards shoring up confidence in the economy."

"The relief to FPIs and the additional liquidity provision to banks and NBFCs are extremely positive. A wide range of measures covering the areas of Taxation, NBFC, MSMEs, Auto, Real Estate, Banking, Infrastructure, and Delayed Payments has been undertaken in a holistic manner with detailed measures."

National Real Estate Development Council's President Niranjan Hiranandani said that liquidity crisis and the need for tax rationalisation are two major challenges facing India's real estate and infrastructure industry, and the Finance Minister's announcements should result in resolution of these challenges.

According to Ficci President Sandip Somany: "This is an extremely welcome move, which will give a major boost to the economy that had started showing signs of a deep slowdown. As these measures take effect, we are sure that these will lift the confidence of businesses and investors alike."

SBI Chairman Rajnish Kumar said: "The slew of announcements made by the Finance Minister will act as major enablers for continuing to support growth. Bank recapitalization at one go will provide a big impetus to credit growth. Also, honest decision-making will not be questioned, a major mojo for a cleaner and better economy. SBI has already started benchmarking its loans to repo and now other banks are likely to follow suit."

The Society of Indian Automobile Manufacturers President Rajan Wadhera said the removal of ban on purchase of vehicles by government department and 15 per cent higher depreciation for all types of vehicles purchased before March 30, 2020 should also give a definite boost to vehicle demand in the short term, especially vehicles meant for commercial use.

Mahindra Group Chairman Anand Mahindra in a series of tweets praised the slew of measures. He tweeted: "I applaud the methodical approach of 'bucketing' key drivers of the economy&administering a healthy dose of 1st-aid to each. I'm naturally enthused that the Auto industry was recognised as a major growth generator & given a bucket of its own."

Leading automobile manufacturer Hyundai Motor India MD & CEO S.S. Kim said: "We are optimistic that this move will boost the customer sentiment in the current market scenario and encourage customers acquisition of car in the coming festival season."

Jaguar Land Rover India President & MD Rohit Suri said: "While the increased depreciation from 15 per cent to 30 per cent and deferment of increased registration fees till June 2020 will have a positive impact, moderation of GST base rate from 28 per cent to 18 per cent for all categories as being requested by the auto industry for sometime now would have been the real demand stimulant."

Volvo Car India's Managing Director Charles Frump said: "Today's announcements by the government will rejuvenate the economy through flow of credit and revival of consumption."

"The decision to allow a higher depreciation on cars, interest rate cuts and BS4 vehicles to run their life of registration will boost demand for the industry. The speed with which the government has responded after meeting various representatives of the industry is also highly appreciable."

On Angel Tax withdrawal, Cyril Amarchand Mangaldas Partner S.R. Patnaik said: "... The Finance Minister today has quelled the anxiety of start-ups around applicability of 'angel tax', by exempting DPIIT registered start-ups from the applicability of any amount received by them towards share premium. Hopefully, the start-ups will receive a positive impetus with these recent changes."

mPokket Founder and CEO Gaurav Jalan said: "The Angel Tax on start-ups and their investors has been an issue for the sector. Withdrawal of this tax and set up of a special cell led by member of CBDT for addressing problems of startups will play a catalytic role, as existing and potential investors will be encouraged to continue to play their part in enabling the entrepreneurial machinery."

Welcoming the government steps to ease liquidity, Vishal Kampani, MD JM Financial Group, said: ""The most important takeaway from today's announcement is the initiatives to provide additional liquidity support to NHB for housing loans, and ease corporate finance accessibility for housing projects. This will help NBFC sector tide over the liquidity stress to a greater extent.