Plan and Policy

Plan & Policy

Patel blames taxes for subdued private investment

Kicking off a fresh debate, Reserve Bank governor Urjit Patel on Wednesday said it is the taxation regime, not high interest rates, that is impinging a pick-up in private investment.

Patel’s remark that came within a week of budget proposal to reintroduce long-term capital gain tax on equities deals a severe blow to the Modi government, which is facing all-round criticism for its poor show on employment generation, among others. The proposal has also sent the stock market on a tailspin.

NBFCs to have separate ombudsman

The Reserve Bank of India (RBI) has decided to introduce an ombudsman for non-banking finance companies (NBFCs) similar to one for the banking sector. The central bank thinks it will provide the customers a cost-free and speedy grievance redressal mechanism.

The scheme will cover all deposit taking NBFCs and also those NBFCs with customer interface having asset-size of Rs 100 crore and above. To begin with, the scheme will become operational by the end of this month for all deposit taking NBFCs, RBI said.

Rate decision was the right one

The RBI decision to maintain status quo was on expected lines. Given the events in the past two-three days and the budget, a status quo was the ideal choice. The possible hardening of inflation due to fiscal slippages and turn in commodity cycle which may give cost push pressure on prices had a bearing on RBI decision to keep the rate constant.

Cap removed on loans to MSMEs

The Reserve Bank of India on Wednesday removed caps on the loan amount of Rs 5 crore and Rs 10 crore per borrower to MSMEs under priority sector lending (PSL).

“In the light of feedback received from various stakeholders and in line with the increasing importance of services sector in our economy, it has been decided to remove the currently applicable loan limits of Rs 50 million and Rs 100 million per borrower to Micro, Small and Medium Enterprises (Services) respectively, for classification under priority sector,” RBI said.

Loan repayment schedule doubled

The Reserve Bank of India (RBI) on Wednesday gave major relief to MSME borrowers, registered under the Goods and Services Tax (GST), by doubling their repayment schedule.

The central bank will allow small businesses to delay their loan repayments up to 180 days from the due date without being categorised as non-performing assets.

Help for small and marginal farmers

Taking a cue from the Union budget’s focus on the rural and agriculture sector, the Reserve Bank of India on Wednesday also initiated moves that promise to support rural incomes and investment, and in turn would provide a further push to aggregate demand and economic activity.

RBI’s bimonthly monetary policy on Wednesday actually initiated a slew of measures for small and marginal farmers, micro, small and medium enterprises. For instance, foreign banks with over 20 branches will now have sub-targets of lending to Small & Marginal Farmers and Micro Enterprises.

RBI maintains status quo on rates

The Monetary Policy Committee (MPC) on Wednesday voted 5-1 in favour of leaving the repo rate unchanged at 6 per cent in line with market consensus in its sixth bi-monthly monetary policy. The stated policy stance remained unchanged at “neutral”.

No tax on LTCG a risk to small investors: Adhia

Even as heavy bout of selling continues on bourses causing immense loss of money to investors, the government has defended its proposed move to tax long-term capital gains (LTCG), saying it was aimed at creating a level-playing field among different investment assets.

Explaining the rationale behind imposing tax on long-term capital gains after a gap of 14 years, finance secretary Hasmukh Adhia on Tuesday said long-term investments in all other assets generating returns are taxed, but the same in stocks was exempt which was creating distortions.

FM signals fiscal slippage amid revenue uncertainty

The budget for FY19 was keenly awaited, being the first after the introduction of GST and the last full budget before the next general elections. Accordingly, it had to balance higher spending and fiscal consolidation in an environment beset with uncertainty regarding revenue buoyancy.

A blueprint for the future

In his path-finding proposals, the finance minister has taken care that the budget contains seeds of growth, which will endure over time. The landmark budget, lays emphasis on agriculture, infrastructure, employment and exports. These were the weak points in the current economic situation. At the same time the budget refle­c­ts values & aspirations of pe­ople and therefore becomes a blueprint for the future.