FM releases Stimulus 3.0; focus on jobs, loans
Finance Minister Nirmala Sitharaman announced third set of measures, worth Rs 2.65 lakh cr, aimed at reviving the economy out of a historic contraction caused by the coronavirus pandemic
NEW DELHI: Finance Minister Nirmala Sitharaman on Thursday announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provided incentives for new job creation as the government widened stimulus measures to boost the economy.
The measures, under the government’s Atmanirbhar Bharat package, that also include additional fertiliser subsidy and already announced production-linked incentive scheme for manufacturing units, totalled Rs 2.65 lakh crore, taking the cumulative stimulus package announced since the lockdown to almost Rs 30 lakh crore, or 15 per cent of the GDP. It also includes additional funding for real estate developers and contractors, a new employment scheme and additional spending on the rural jobs plan.
Doubling down on the previously announced measures, she said income tax law will be relaxed to allow primary or first sale of housing units of up to Rs 2 crore at a price that can be 20 per cent below the stamp duty circle rate. Under the new job creation scheme, the government will provide a subsidy equal to the contribution that an employee and the employer have to make towards the retirement fund (totalling 24% of the wages) to establishments that hire new employees or rehire those it fired. The measures are the government’s latest efforts to boost the economy.
NEW DELHI: Finance Minister Nirmala Sitharaman on Thursday said the Indian economy was witnessing a strong recovery.
Addressing the media here, Sitharaman cited several data, including the growth in Composite Purchase Managers Index (PMI), GST collections, FDI inflow and the stock markets' recent surge to record highs to show a strong revival of the Indian economy. She also said bank credit has grown by 5.1 per cent on a year-on-year basis. FDI inflows in April-August stood at $35.37 billion, 13 per cent higher on a year-on-year basis.
The minister noted that prominent economists have suggested that the rebound has not come only due to pent-up demand but also because of "strong economic growth". She added Moody's also has scaled up India's GDP growth estimate for the FY22 to 8.6 per cent now from 8.1 per cent earlier. The RBI in its latest monthly bulletin said that India has technically entered into a recession with a likely contraction in its GDP during the July-September period.
RBI's Economic Activity Index estimates that India's GDP growth for the second quarter of the current financial year was negative and the GDP contracted by 8.6 per cent during the quarter. The Central bank, however, noted that growth is likely in the third quarter of the current quarter, which was also cited by the Finance Minister to show a revival of the Indian economy.