List out rhe ooints for corrections made inindian economy
Answers
The distinction of being one of the fastest growing economies in the world over the last three decades. Yet, today there is a sense of economic malaise in the air. The young are feeling frustrated as there are too few good jobs on the horizon for them. Rural areas are in distress as farm incomes have stagnated. Corporate investment has declined. Banks burdened with bad loans are finding it difficult to lend. Exports have declined. There are telltale signs of the onset of a further slowdown.
The Government is also showing signs of panic. Soon after witnessing the unease in the corporate sector after her budget speech in July 2019, the Finance Minister started holding consultations with business leaders to assuage their displeasure. The tax surcharge on income of over Rs 2 crore on capital gains of individual and institution investors (domestic and foreign) has been removed; only that on salaries and rent received by individuals remains. Several other measures have been announced: the merger of some public sector banks, recapitalisation, loan melas and moratorium on repayment of micro, small and medium enterprise (MSME) loans. All of these, except the last one, are supply side measures and are unlikely to have much of an impact anytime soon on stimulating demand.
Will the corrective measures recently taken by the government arrest the slowdown? If they do not, what would?
The measure that has received the most media attention is the corporate tax cut. In the third week of September came the announcement that the corporate tax rate would be cut from 30% to 22% for firms that do not seek any exemptions and from 35% to 25% for those who do. For manufacturing firms the tax rate would be as low as 15% for those making investments after October 2019. The news was welcomed by the corporate sector and boosted the Sensex index on the day of the announcement by as much as 4.5%