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Finance Minister’s mini-budget plan: Can it reform the Indian economy?

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Responding to the furore over the Indian economy going through a period of stress, Finance Minister Nirmala Sitharaman on Friday held a press conference. Addressing the media, she had revealed the plans to reform Indian Economy.

“India’s GDP continues to grow at a faster pace than the global economy and any other major economy,” Sitharaman said to the press. She also said that the reformation process is a continuous one for the government and it is their top priority.

Earlier, on Thursday, VC of Niti Aayog Rajiv Kumar termed the ongoing financial slowdown issue as unprecedented. According to him, the economic stress of India is unprecedented in the last 70 years.

For those who had lost faith after Budget 2019, the introduction of these new plans will surely be a sigh of relief for them.

The points that had been focused during the presentation of the revival mini-budget are:

Automobile Sector

The Finance Minister lifted the ban on the purchase of vehicles by the government departments. She also increased the depreciation to 30% by allowing an additional 15% on all the vehicles bought till March 2020 from now onwards.

Putting off the decision to hike the one-time registration fee on vehicles till June 2020, the Finance Minister clarified that BS IV vehicles will remain operational for the full period of registration if bought before 31st March 2020.

She also mentioned that the government is planning to come up with a scrappage policy for the vehicles.

GST Refunds

Clearing the issue of pending GST, Nirmala Sitharaman said that all the pending GST refund due to the MSMEs will be paid within 30 days. Also, for the new applications, GST refunds will be paid within 60 days.

“The government will also consider the amendment to the MSME Act to move towards a single definition,” Sitharaman included.

Infrastructure

Sitharaman also reported an investment of INR 100 lakh crores on building modern infrastructure within the next five years.

Talking about infrastructure growth with this uplifting investment, she stated, “An inter-ministerial task force will be formed by the Department of Economic Affairs to finalise the pipeline of infrastructure projects.”

Angel Tax

The Finance Minister also announced the withdrawal of angel tax for startups and their investors giving solace to them. A dedicated cell under the member of CBDT (Central Board of Direct Taxation) will be set up to address the problems of the startups.

“To mitigate genuine difficulties of startups and their investors, it has been decided that Section 56(2) (viib) of the Income Tax Act shall not be applicable to a startup registered with DPIIT,” the Minister said.

Investment in Public Sector Banks

With the aim of improving the liquidity crisis of the economy, the government has planned to infuse an upfront amount of INR 70,000 crores into public sector banks. She said the move will produce additional lending and liquidity in the financial system releasing INR 5 lakh crores in the market.

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