Union Finance Minister Nirmala Sitharaman announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provided incentives for new job creation.
India Inc on Thursday welcomed the bouquet of measures announced by Finance Minister Nirmala Sitharaman and said these would deliver festive cheer and have a multiplier effect on the growth trajectory through support to stressed sectors, thrust to job creation and increased private investments. Sitharaman announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provided incentives for new job creation as the government widened stimulus measures to boost the economy.
The measures that also include additional fertiliser subsidy and already announced production-linked incentive scheme for manufacturing units, totalled Rs 2.65 lakh crore, taking the cumulative stimulus package announced since the lockdown to almost Rs 30 lakh crore, or 15 per cent of the Gross Domestic Product. “It is heartening to note that despite fiscal constraints, the government chose to hasten the recovery process by spending an additional Rs 2.65 lakh crore, thus taking the cumulative fiscal stimulus (till date) to Rs 17.2 lakh crore or 9 per cent of GDP,” said Uday Kotak, President, CII.
He said the government’s decision to extend the Emergency Credit Line Guarantee Scheme (ECLGS) for the 26 stressed sectors identified by the Kamath Committee will help the sectors, which employ a large number of people, tide over the cash crunch and working capital issues, in the wake of low demand. Ficci President Sangita Reddy the clear focus on housing, infrastructure and construction shows that the government wants to leverage the huge multiplier impact these sectors have to rev up the economy that is already showing multiple signs of recovery.
“We saw a powerful multi-sectoral boost coming in from the government today,” she said. The industry body complimented the finance minister for the “huge Diwali bonanza” that will lift growth, employment, exports and make India part of the global value chains. “Of the dozen announcements that we heard today, perhaps the most significant was the one relating to the production linked incentive scheme wherein 10 new champion sectors have been added with an outlay to the tune of Rs 1.46 lakh crore,” Reddy added.
PHD Chamber of Commerce and Industry President Sanjay Aggarwal said the reforms will have a multiplier effect on the economic growth trajectory through enhanced demand, job creation, increased private investments, escalated exports and growth of sectors that have strong backward and forward linkages. Sitharaman cited data, including increase in tax collections for goods and services, rise in energy consumption and improvement in bank credit to state that the economy was seeing “strong recovery” taking root.
The Indian economy has recovered from its worst-ever contraction of 24 per cent in the April-June quarter but will end up shrinking by close to 10 per cent in the fiscal year to March 2021, as per forecasts.