Friday, October 7, 2022

FM’s package will boost growth, stabilise economy: CII

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New Delhi: A multi-sectoral, 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 the Confederation of Indian Industry (CII). Coming in the wake of several retaliatory and counter-retaliatory trade measures between US and China, the economic package announced by Finance Minister Nirmala Sitharaman on Friday imparts stability and underpins a new growth impetus for India, said CII.

‘Macro impact could be significant’

“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 Vikram Kirloskar, CII President.

CII expects economy to pick up

India’s GVA growth stood at 5.8 percent 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, a statement said.

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.

‘Measures aimed at raising investment’

“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, CII President Designate. He further added, “CII and Industry are looking forward to more such announcements from the Finance Minister, as mentioned by her in her speech of August 23.”

‘Removal of FPI surcharge will boost investor sentiment’

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 Rs 22,000 crores 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, the statement said.

‘Credit momentum restored’

Tax measures such as alleviating angel tax on startup investors and easier long term and short-term capital gains tax promise to re-energise 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 make credit decisions. With credit momentum being restored, demand in the economy is bound to pick up in coming months, in turn leading to capacity enhancements, CII said.
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