RBI expects growth to pick up from Q2 on government spending

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Published: September 20, 2019 12:45:34 PM

The governor also welcomed the government announcement in the morning to slash corporate tax across the board and termed the same as bold moves which should benefit all sectors.

RBI, Shaktikanta Das, GDP numbers, GDP growth in Q1, Nirmala Sitharaman, corporate tax, latest news on shaktikanta dasDas also reiterated the possibility of more rate cuts if incoming data support such a move but warned against government initiating any fiscal expansion, saying it has no legroom to do so given the high deficit numbers.

Reserve Bank governor Shaktikanta Das Friday exuded confidence that second-quarter GDP numbers will be better than the previous one as the government has started spending again. Attributing the 5 percent GDP growth in Q1, which is a six-year low and is even lower than that of Pakistans 5.4 percent, to very low government spending, Das said with the centre opening its coffers again growth should pick up going forward.

The governor also welcomed the government announcement in the morning to slash corporate tax across the board and termed the same as bold moves which should benefit all sectors. In a major fiscal booster, the government slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.

Also read: Nirmala Sitharaman’s 4 economy boosters: From slashing corporate tax rate to relief for FPIs; key measures

Finance Minister Nirmala Sitharaman on Friday said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually. This, she said is being done to promote investment and growth.

Das also reiterated the possibility of more rate cuts if incoming data support such a move but warned against government initiating any fiscal expansion, saying it has no legroom to do so given the high deficit numbers. He also called for urgent structural reforms especially inland and labour as well as entrepreneurial areas.

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