New Delhi: Eventually, the government blinked, rolling back some of the controversial measures introduced in the budget, including the enhanced surcharge levied on capital gains.
On Friday, finance minister Nirmala Sitharaman also announced a slew of measures to stoke demand, including a rejig of its spending programme by front-loading it, addressing supply-side bottlenecks and easing bank credit rules, even as she promised to end “tax terrorism" that has left India Inc. jittery.
The finance minister took care to hit the right notes on the optics. Not only did she send out an unambiguous signal on the government’s commitment to pursue big-ticket reforms, she also conveyed the message that the government is listening to all stakeholders.
The intent clearly is not only to revive economic momentum, but also address the growing sense of gloom and doom. While the counter-cyclical measures, especially the spending stimulus, will in all probability give a sugar high to the economy, the promise of a step-up in reforms signals that some structural measures may be on the anvil.
“Next week we will be coming with one more set of announcements. You may expect us to talk to you twice more in the near future," Sitharaman said while concluding her presentation.
Prime Minister Narendra Modi, while addressing the Indian community in Paris earlier in the day, signalled similar intent. “(The ideology of) reform, perform and transform, together with processes, (has enabled) the country to move with determination and will continue to do so to achieve its aim and reach its destination," he said.
Coincidentally, the finance minister’s remarks came on a day rating company Moody’s Investors Service pared India’s growth estimate from 6.8% to 6.2% in the current fiscal year. They were preceded by similar revision in forecasts by the Reserve Bank of India, International Monetary Fund and the World Bank—all of them confirming the growing apprehension that the Indian economy was cooling.
The package of measures, Sitharaman hopes, will arrest if not reverse the slowdown. She would take heart from the fact that the annual monsoon, after a slow start, has picked up pace; it is now almost certain that the country as a whole—though some regions are still deficient—will receive normal rains as forecast.
As on 23 August, India has recorded an excess of 1% monsoon rains. The rainfall scenario has improved significantly in August, after June and July ended with deficit rains.
Shreya Nandi and Gyan Varma contributed to this story.
