SME Times News Bureau | 26 Aug, 2019
multi-dimensional policy stimulus has been strategically unveiled for key
drivers of the Indian economy, at a time when the world economy is buffeted by
global headwinds and trade slowdown, said a CII press statement.
Coming in the wake of several
retaliatory and counter-retaliatory trade measures between the two largest
global trading nations, the economic package announced by Nirmala Sitharaman,
Minister of Finance and Corporate Affairs, on Friday imparts stability and
underpins a new growth impetus for India, according to CII.
"The macro impact of the
economic package announced can be expected to be significant It is indeed
commendable that all these multi-sectoral steps were carried out without
pressure on the fiscal deficit. With her six-dimensional announcement, FM has
indeed hit a sixer out of the grounds," said CII President Vikram Kirloskar.
India's GVA growth stood at
5.8% in the fourth quarter of 2018-19 and advance indicators reveal that it
might remain range-bound in Q1 FY2019-20.
The FM's policy package covers
financial sector, taxation, MSME, and automotive sector, which were being
advocated by CII. CII expects that the economy will climb up in coming months.
CII's Business Outlook Survey
for April-June 2019 stood at 59.6, lower than 65.2 in the previous quarter. It
revealed that as of June, two-thirds of survey respondents expected growth of
over 6.5% for 2019-20.
"The comprehensive measures
removing enhanced surcharge on FPIs and DIs, securing transmission of lower
repo rates, addressing delayed payments and ensuring that bank officials are
confident about lending are strategically targeted towards raising investments.
Creation of a shelf of infrastructure projects and announcement of a long-term
financial institution have wide positive ramifications for the economy," stated Uday Kotak, President Designate, CII.
He further added that "CII and
Industry are looking forward to more such announcements from the Finance
Minister, as mentioned by her in her speech of 23 August."
In the Budget 2019-20, the
announcement of levy of enhanced surcharge on the FPIs had impacted the
sentiments of investors in the market. Post announcement, the market saw an
outflow of FPIs on a cumulative basis worth over ?22,000 crore in July and August.
Removal of surcharge on FPI
investments by Ministry of Finance and the amendments in the FPI regulations by
SEBI is expected to boost the investor sentiments and is in line with CII
recommendations for the equity markets.
Tax measures such as
alleviating angel tax on startup investors and easier long term and short-term
capital gains tax promise to re-energize investments. The clogged pipeline of
loans is also unblocked with various steps for banks, NBFCs and HFCs to infuse
liquidity and address procedural issues.
A key measure is recognition
of the fact that bank officials have turned risk averse and restoring their
ability to take credit decisions. With credit momentum being restored, demand
in the economy is bound to pick up in coming months, in turn leading to
For the MSME sector, which has
been anxious about GST refunds being held up, access to working capital and
delays in revenue receipts, a broad range of procedural measures addresses key
pain points. The time-bound relief from pending GST refunds will unlock working
capital and FM has assured MSME that redefinition would be top priority on her
Since the MSME Development Act
was introduced in 2006, MSME have been defined by investments in plant and
machinery, which is long outdated.
CII has been advocating for a
new way to identify MSME based on turnover, employment and other criteria that
will both provide special policies for the sector and also encourage them to
grow rather than remain small to take advantage of such policies.
The decision to amend the
Companies Act for making insufficient Corporate Social Responsibility spending
a civil rather than a criminal matter is a sentiment booster as it addresses
the trust deficit.
CII is pleased to note that
the Ministry has taken cognizance of industry’s views on this provision and
taken due steps by suggesting a monetary penalty and treating it as civil
offence. We look forward to the notification of the revised provision by the
Government of India.
"With the global environment in high flux, India
remains well-poised for staying at the top of the growth ladder. FM's brilliant
policy announcements greatly reassure industry, reiterate the government’s
strong partnership approach and build trust between all stakeholders, be it
consumers, lenders, officials, or entrepreneurs," complimented
Mr Chandrajit Banerjee, Director General, CII.