Dear Finance Minister, Economy Needed Booster Shot Not An Aspirin

Video Editor: Purnendu Pritam

After Union Finance Minister Nirmala Sitharaman’s media briefing on Friday, 23 August, you might see some headlines saying that the government has made ‘a slew of big announcements to take India’s growth trajectory to the higher level.’

However, the major announcement that came on Friday, 23 August, from the finance minister was that of the removal of enhanced surcharge on the FPIs.

Giving in to the demands of overseas investors, Sitharaman on Friday announced rollback of enhanced surcharge on foreign portfolio investors levied in the Union Budget 2019.

Surcharge on long and short term capital gains arising from transfer of equity shares has also been withdrawn.

The second major announcement was regarding the liquidity. The finance minister has said the liquidity in the market is available.

She has said that the government will infuse upfront Rs 70,000 crore into public sectors to enable release of Rs 5 lakh crore liquidity in the market.

The third big announcement was that the process to take loans will be made easier. The government announced a slew of measures to ensure that loans for home, vehicles and consumption goods become cheaper and widely available through banking and non-banking finance companies.

And the fourth major announcement was in regards to the Goods and Services Tax, where the finance minister said that all the pending GST refunds due to micro, small and medium enterprise (MSME) sector will be paid within 30 days.

Also, in future, all GST refunds of MSMEs will be paid within 60 days from the date of application.

All these announcements come amidst the news of economic slowdown and a market meltdown on Thursday, 22 August in order to improve the sentiments of the public.

Economic experts, who want to remain anonymous, told The Quint that the biggest questions cropping up after these announcements are – Will the consumer demand increase or will the investor demand increase? By easing the loan process, people start being cars and houses?

The answer is no. People are postponing their purchases and business plans because they want more clarity. There are global headwinds as well.

Now, the government is taking credit as they say that India is not as affected by global headwinds. This is one way of improving the market sentiments but to call it a booster is a wrong conclusion.

When the finance minister said that the government is going to come up with more announcements in the coming weeks, it indicates that it is a work in progress and the picture is not clear as to how the government will tackle this current situation.