FM gives booster dose to revive economy

The government has finally responded to the slowing economy and falling market. In a very comprehensive and better-than-expected way, the Finance Minister Nirmala Sitharaman on Friday addressed the concerns of various sectors of the economy. The government has also announced the withdrawal of tax surcharge levied on long-term and short-term capital gain on FPIs, which was imposed in the recent budget. The best part of the entire announcement was that it was not done at the cost of fiscal profligacy. Therefore, the FM has managed to walk a very tight rope. 

Beside this, government has announced various measures to revive different sections of the economy.

·         Rs. 70,000 crore for recapitalisation of public sector banks that was announced in the budget will be released upfront. This will help in credit growth of the bank and help the overall economic growth.

·         Withdraws angel tax provisions for start-ups

·         Both electric vehicles (EVs) and Internal Combustion Vehicles (ICV) will continue to be registered.

·         Banks to launch repo rate or external benchmark linked products

·         NBFCs  and MFs to be allowed to use Aadhar to complete KYC process

·         NHBs to give Rs. 20,000 extra liquidity to HFCs

·         BS IV vehicles bought before 31st March 2020 will remain operational for their full period of registration. Further, the FM also deferred the decision to hike the one time   registration fee on vehiles till June 2020. Both electric vehicles (EVs) and Internal Combustion Vehicles (ICV) will continue to be registered.

The announcements made by the FM clearly shows government's intent to tackle the economic and market slowdown head-on. We believe that these finely balanced measures will help improve sentiment. We may see higher opening of key equity indices on Monday.