Taxpoint: Presentation made by Chief Economic Adviser on measures taken to boost Indian Economy

Presentation made by Chief Economic Adviser on measures taken to boost Indian Economy

Measures implement a planned economic strategy

Measures to Support Consumption

Support to NBFCs and HFCs to support retail lending:
- Total sanctioned support of Rs.4.47 lakh cr includes Rs.1.29 lakh cr for pool buy outs of assets
Partial credit guarantee scheme for NBFCs and HFCs
- Cabinet approval for SMA 0 borrowers; asset pools rated BBB+ or better;
- Within two days,17 proposals amounting to Rs. 7657 Cr. Approved. Proposals amounting to Rs. 20,000 crores to be approved over next two weeks.
Government & PSU dues cleared in two stages: Upto Rs. 61,000 Crores previously
- Dues of 32 CPSEs ( Navratnas & Maharatnas ) cleared by more than 60% in last two months
- 21/32 CPSEs have set up “Online Bill Tracking” systems to reduce pendency in bill payment and reduce Accounts Payables of CPSEs permanently; Rs. 4877 Cr. Currently due
Following RBI guidelines mandating banks to link their lending rates to external benchmarks, all PSBs have introduced Repo Rate linked loan products
- 8.18 lakh Repo linked loans (Rs. 72,201 Cr.) sanctioned till 27 th Nov 2019
MSME Bill Discounting: 5.06 lakh bills (Rs. 12,698 Cr.) till 15 th Nov 2019
Transparent One time Settlement Policy in PSBs: 5.26 lakh (Rs. 16,716 Cr.) sanctioned

Measures to boost Investment

Continuous liberalization has resulted in record FDI inflows : $35 billion in H1 2019-20 as against $31 billion in H1 2018 19
Corporate tax rates cut: 15% tax lowest among peers
- Given large market and large labour force, these tax rates make India more attractive than other countries
Capital Expenditure ( Capex ) by the Government
- 66% of budgeted Capex of Rs. 3.38 lakh Cr already undertaken
- Indian Railways & Ministry of Road Transport and Highways projected to undertake Capex of Rs. 2.46 lakh Cr by 31.12.2019
- Select CPSEs (32 Maharatnas and Navratnas ) have undertaken Capex of Rs. 98,000 Cr till Nov 2019. Projected to undertake Capex of Rs. 60,000 Cr in the rest of the year
Approval of a realty fund worth Rs. 25000 crore for stalled housing projects
- Fund (SWAMIH) is fully operational and Investment Committee is completing due diligence on the first set of deals today
- Necessary changes in IBC to enable the Fund’s operations
- Careful due diligence requiring coordination done in record time (6-8 weeks as against 6-8 months usually)
- Fund has found excellent traction from 13 domestic financial institutions including HDFC, SBI, LIC. Legal documentation for Rs. 10,530 Cr. already executed
- Process has incorporated lessons from previous episodes of careless fiscal expansion
Credit expansion via PSBs: Rs. 60,314 Cr equity infused; Rs. 4.9 lakh cr. Disbursed
- Rs. 2.2 lakh Cr to Corporates; Rs. 72,985 Cr to MSMEs and Rs. 39,453 Cr. to retail borrowers
Enable and protect honest decision-making in PSBs
- Internal Advisory Committee (IAC) in banks to classify cases as vigilance or no vigilance;
- IAC/CVO decision to be final
- Advisory Board for Bank Frauds set up

Key Reforms in Capital Markets to enable financing

Law passed by Parliament for setting up unified regulator for International Financial Services.
- This will enable capital flows by reducing regulatory and compliance burden.
- Bring back trading of Indian financial products from off shore centres.
Regulatory burden for equity/equity-like instruments eased through comprehensive Rules for FEMA Non-Debt Instruments
- Will streamline the foreign investment regime
One Unified market across the country for financial instruments through rationalisation of Stamp Duty
- Key recommendation of H R Khan Committee to foster Development of Corporate Bond Mkt
A revised ECB Framework has been prescribed to rationalise the scheme of foreign debt access by Indian companies
- Includes Working Capital loans and Rupee denominated loans
- Will enable capital raising by Indian Corporates for funding investment
A framework for debt ETF has been notified by SEBI
- Bharat Bond ETF utilises this framework
A framework to allow shares with Differential voting rights (DVR) enabled
- Foster new economy by encouraging start-ups to raise funds from the market without diluting promoters’ interest in the company
Interoperability among clearing corporations has been implemented
- Enable efficient use of capital for clients who trade on multiple stock exchanges
Plain vanilla options in Commodities have been enabled for trading on exchanges
- Will facilitate hedging of risks in agricultural commodities
Norms applicable for Credit Rating Agencies have been tightened
- Will enable further development of credit markets
Know Your Customer (KYC) norms for FPIs: In consultation with the Ministry, SEBI has approved several changes in the KYC norms for FPIs on 5th November 2019
- Include simplified documentation requirements and exemptions for regulated entities
Increase in statutory limit for FPI investment in a company from 24% to sectoral foreign investment limit w.e.f. 01.04.2020
On 4th Oct 2019, RBI announced its decision to:
- Permit USD-INR trading at GIFT IFSC and
- Allow domestic banks to freely offer foreign exchange prices to non-residents at all times
- Bring offshore Rupee market to domestic stock exchanges and permit trading of USD -INR derivatives in GIFT IFSC
- Thereby enable further development of Forex market

Reforms: Disinvestment to enhance economic efficiency

Disinvestment in non-priority areas where competitive markets have come of age
- Enable private buyers to bring capital, technology and better management
- Enhance productivity and thereby economic growth
- BPCL, CONCOR & SCI
Widening the bandwidth of disinvestment for minority stake sale:-
- Govt. equity to be brought down below 51% in select CPSEs on case-to-case basis
- This will increase wider public ownership of selected CPSEs
Bharat Bond ETF to enable private participation and wider pool of financing for CPSEs

Measures to improve ‘Ease of Doing Business’

India has jumped to 63rd in World Bank’s EODB rankings; IBC a primary contributor to the same
- Ring-fencing successful bidders of stressed assets from the risk of criminal proceedings against offences committed by previous management and promoters
- Threshold for financial creditors to prevent triggering of insolvency for small amounts
No need for Debenture Redemption Reserve (DRR) for debentures issued by Listed companies, Banks, NBFCs and HFCs
- Will reduce cost of issuance and help in developing the corporate bond market
CSR violations de-criminalized and to be treated as civil offence
NBFCs permitted to use the Aadhaar authenticated bank KYC
Code on Wages 2019 notified in August 2019
- Subsumes four acts to transform old and obsolete labour laws into more accountable and transparent ones. Enhances ease of compliance
Code on Occupational Safety, Health and Working Conditions Bill, 2019, introduced in Parliament in July 2019
- 13 Central Labour Laws brought in ambit of New Code
Industrial Relations Code, 2019 introduced in Parliament on 28th November 2019
- Amalgamates and rationalizes three Central Labour Acts to impart flexibility to the exit provisions (relating to retrenchment etc.)
Social Security Code Bill, 2019 introduced in Parliament on 11th December 2019
- Enables universal security of workers
Contribution of ESIC reduced from 6.5 percent to 4.0 percent.
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