India's growth falling to a more than six-year low of 4.5 per cent in the second quarter of 2019-20 is sub-optimal and below the potential of the economy, the industry pointed out.
Finance Minister Nirmala Sitharaman on Saturday said about 12 global companies have evinced interest to shift their base from China to India, taking advantage of competitive tax rate of 15 per cent announced recently.
In a biggest reduction in 28 years, the government in September reduced corporate tax rate by almost 10 percentage points in a bid to give a boost to sagging economy.
Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and for new manufacturing firms incorporated after October 1, 2019 and starting operation before March 31, 2023, it was slashed to 15 per cent from 25 per cent.
“I had said that I will form a task group, which will look into those companies which want to get out of China, and in the meanwhile I announced the corporate tax cut. There were many companies which were showing interest and wanting to come back.
“So, this task force has already started contacting many of these companies. The last count, I came to know was about 12 of them have already been spoken to, their minds understood, their expectation listed out so that the government can come up with a concrete offer for them to shift from where they are now, so that the ecosystems can get built here, new industries can come,” she said.
The minister said the word that was given for bringing newer industries, which are moving out of China, is actively moving forward.
“And I am sure, I will be able to report some progress on that,” she added.
With regard to investment of Rs 100 lakh crore in the next 5 years, she said, the task force will come out with a list 10 major infrastructure projects by December 15 and investment in these projects would be front-loaded.
“We made sure that a set of officers were looking into pipeline that can be readied, so that once the fund is ready and it will be front-loaded…that task is near completion,” Sitharaman said.
Before December 15, she said the government will be able to announce the front-loading of at least a 10 major projects.
The finance ministry in September set up a task force headed by Economic Affairs Secretary to prepare a road map for the “national infrastructure pipeline” from 2019-20 to 2024-25 under a Rs 100 lakh crore infra plan. The task force expected to cover greenfield and brownfield projects costing above Rs 100 crore each.
The finance minister also listed some of the measures taken by the government to boost consumption and liquidity in the system since August this year.
Talking about the GDP growth rates, she expressed hope that the next numbers should be better.
India’s growth falling to a more than six-year low of 4.5 per cent in the second quarter of 2019-20 is sub-optimal and below the potential of the economy, the industry pointed out.
During the loan outreach programme in October, public sector banks have disbursed more than Rs 2.5 lakh crore, the finance minister said while outlining various measures taken by the government to revive economy.
“They (banks) reached out to 400 districts, literally the hinterland where the money went. And as a result, now I can see somewhat that kind of spend has helped in somewhat reviving the consumer spirits and purchases have gone up and I also hope that it will lead to improvement in tax collections,” she said.
She, however, said the progress on partial guarantee scheme is not very satisfactory.
“I’d like to draw your attention to the partial guarantee scheme which we brought in, so that all the pooled assets could be bought over by the banks and for which the government would give the partial guarantee with a minor haircut… A lot more is going to be done on that and I admit that things have been a bit slow,” she said at the Ecnomic Times Award event here.
To ensure transparency in the taxation, Sitharaman said that faceless assessment has been introduced in direct tax, and indirect tax too will have this system soon.
“And the last word on GST. The systems are really being worked on so that it becomes as simple as we claim it to be. We would further like to simplify it,” she said.
As regards the rationalisation of the taxation, she said, “We are having a good conversation with all the states and want to make sure that those essential items may be put to the lowest if not exempt, but for the rest of them, we are trying to rationalize”.