The tax bonanza for India Inc. on Friday ignited a fresh political face-off between the ruling Bharatiya Janata Party (BJP), which called it historic, and opposition parties led by the Congress, which described it as a U-turn.
The political tussle is significant as it comes against the backdrop of economic issues taking centre stage in the national discourse, with the opposition trying to corner the National Democratic Alliance (NDA) government on the slowdown.
“Amazing what PM is ready to do for a stock market bump during his #HowdyIndianEconomy jamboree. At +1.4 Lakh Crore Rs. the Houston event is the world’s most expensive event, ever! But, no event can hide the reality of the economic mess “HowdyModi" has driven India into," tweeted former Congress president Rahul Gandhi.
The timing of the move is crucial because it comes just days before the Election Commission’s likely announcement of dates for the upcoming assembly elections in Maharashtra.
Mumbai being the financial capital of the country, the tax cut is likely to resonate with India Inc. ahead of the state elections.
While the Union government has tried to revive investment in the country, the move will also give a level playing field to domestic companies.
“The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians," Prime Minister Narendra Modi tweeted after the announcements by finance minister Nirmala Sitharam.
With assembly elections due in fours states—Maharashtra, Haryana, Jharkhand and Delhi—the timing of the tax cut is likely to help the ruling BJP, which will face arch rival Congress in a direct contest in three states.
The BJP is also looking to re-establish its dominance in the Delhi assembly after the 2019 general election results.
“Modi government is committed to making India a big manufacturing hub, and this decision, along with previous announcements of relaxing FDI (foreign direct investment), will go a long way in realising this objective. I congratulate PM @narendramodi and FM @nsitharaman for announcing these bold measures," home minister Amit Shah tweeted.
Some other parties, however, feared the move will benefit corporates rather than the ordinary people.
“When we needed more money in the hands of the people to stimulate demand, the govt has handed it to corporates instead. This is crony capitalism at its worst," Sitaram Yechury, general secretary, Communist Party of India (Marxist), or CPM, tweeted.
“Announcement timed for proposed spectacle of “Howdy Modi" in the US? Massive concessions to foreign speculators. India is going through its worst phase after independence and all we are getting is a callous govt and circuses," Yechury added.
The core of the opposition’s attack is the allegation that the government was going back on promises made during the budget presentation a few months ago.
“Your 2019 budget increased #CorporateTax to 30% despite many objections. Today after yet another U-Turn by the FM, you pat yourself on the back & call the move historic-The only thing historic is a govt that refuses to accept responsibility for destroying a thriving economy," the Congress party tweeted from its official Twitter handle.