Tuesday February 25, 2020
Home Business Finance Minis...

Finance Minister Nirmala Sitharaman Measures To Boost Export and Housing Sector

With GDP growth sliding to six-year low of 5 per cent, Finance Minister Nirmala Sitharaman on Saturday announced a fresh set of measures to boost exports and the housing sector.

0
//
TV, LED panels, Finance Minister, India, import duty
Finance Ministry has abolished the import duty on open cell LED TV panels from 5 per cent to zero. Wikimedia Commons

With GDP growth sliding to six-year low of 5 per cent in April-June quarter and several sectors facing low demand, Finance Minister Nirmala Sitharaman on Saturday announced a fresh set of measures to boost exports and the housing sector.

The key measures include extending the scheme of Reimbursement of taxes and Duties for export promotion, fully automated electronic refund for Input Tax Credits (ITC) in GST, revised priority sector lending norms for exports and expanding the scope of Export Credit Insurance Scheme (ECIS). An inter-ministerial working group has also been formed to monitor export finance.

Accordingly, the Scheme for Remission of duties or Taxes on Export Product (RoDTEP) was announced which will replace Merchandise Exports from India Scheme (MEIS) for textiles. In effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together.

Revenue foregone on this account is projected at up to Rs 50,000 crore.

Existing dispensation in textiles of MEIS plus old ROSL scheme will continue up to December 12, 2019. Textile and all other sectors which currently enjoy incentives upto 2 per cent over MEIS will transit into RoDTEP from January 1, 2020.

Finance, Minister, Nirmala Sitharaman, GDP, Measures
There is concern about the speed and nature of the government and industry’s response, and will these actions turnaround things immediately, or not. Pixabay

Sitharaman also announced to reduce turnaround time for exports by leveraging technology and benchmarking it to Boston and Shanghai ports.

She said that priority sector lending norms for exports is being examined by the RBI and the guidelines will come out soon. Further, government will provide Rs 1,700 crore for export guarantees and to cut credit cost for the exporters.

The minister came out with several measures to prop up country’s housing sector which is considered one of the main job creators. Now, there would be relaxed ECB norms for housing sector. Further, interest on house building advance would be lowered by linking it with 10-year government securities.

ALSO READ: India has Over Time Become Hub and Spokesperson for World Cricket

Sitharaman said that there would be special window for affordable and middle-income housing. Under this, a special window to provide last-mile funding for housing projects which are non-NCLT, non-NPA cases to complete unfinished projects. For this, a fund of Rs 10,000 crore would be contributed by the government and “roughly the same size by outside investors.”

The fresh set of measures to boost the economy has come in the wake of sinking business sentiment across the industry.

With most engines of growth stuttering, the Reserve Bank of India recently lowered its GDP forecast and pegged it at 6.9 per cent in 2019-20. Several rating agencies and research firms expect the growth to be in the range of 6.5-7 per cent.

Besides domestic consumption slowdown, the external factors remain adverse threatening to pull down the economy. A lingering US-China trade war and fears of a global recession could make things worse. (IANS)

Next Story

As India’s Economy Becomes Weaker, Finding Job Becomes Harder

As India’s Economy Sputters, Finding Work or Employment Becomes Harder

0
India economy
The slowdown in the construction sector, the second biggest employment provider after agriculture, is the most visible sign of India’s sputtering economy. Pixabay

By Anjana Pasricha

Tens of thousands of migrants from India’s countryside poured into the city of Gurugram as gleaming chrome and glass office buildings, high-rise apartments and upmarket shopping malls transformed the sleepy farming village on New Delhi’s outskirts into a booming business district over the last 15 years.

Huge construction projects and busy factories made it easy to find steady work in the city whose rapid growth coincided with a decade-long economic boom that lifted 270 million people out of poverty between 2006 and 2016.

Among them was 27-year old Javed Khan, who arrived more than a decade ago. As he searched for work, his first stop was a city intersection where day laborers gather to wait for contractors to pick them up. “When I first came here, I earned a decent wage,” he said. “Work went very well.”

But these days, he grows despondent as the wait at the same intersection becomes longer and longer. Khan said work has been hard to come by in the last year. “One-thousand of us collect here daily. Only 30 or 40 get picked up. The rest of us slowly go home.”

India economy
Vehicles drive past the commercial towers in Gurugram on the outskirts of New Delhi, India. VOA

The swelling numbers of those searching for work is not surprising. Not many new buildings are going up as economic growth plummets to its lowest rate in a decade — from 8% four years ago to a projected 5% in the fiscal year that ends in March.

The slowdown in the construction sector, the second biggest employment provider after agriculture, is the most visible sign of India’s sputtering economy. It is a huge blow for millions of people who depend on daily wage job in cities to support themselves and their families back in villages. Rural areas depend heavily on remittances from migrant construction laborers.

Adarsh Kumar, 21, arrived in Gurugram three years ago. He said for two years he earned enough to send money to his parents, but now he can barely pay for his own room and board. “You work for 10 days and you sit idle for 20 days managing on that money.”

Low-income workers are not the only ones who have been badly hit in India’s struggling construction sector.

At the height of the economic boom, tens of thousands of homebuyers invested in housing projects in Noida, another fast-growing neighborhood in New Delhi’s vicinity. Now, partially constructed buildings dot the skyline as a credit crunch cripples developers and stalls hundreds of projects.

It is a huge blow for middle-class families. Some have seen their savings erode while others are stuck paying mortgages for unfinished homes.

Alpana Majumdar invested nearly $50,000 in an apartment in Noida that was to be completed five years ago, and for which she is still waiting to take possession of. “We were thinking if we get that house, we can give it on rent and I can earn some money from there,” she said.

With less money in their pockets, an aspirational middle class is buying fewer goods like cars and refrigerators — a hard blow to a country whose economy is largely powered by the money spent by its burgeoning middle class.

Auto showrooms are facing their slowest demand in 20 years while small shops cope with dropping sales as daily wage workers struggle to eke out a living.

The other big employment provider, factories and exporting units located in Gurugram’s industrial hub, are not faring much better. Exports have declined for six months in a row.

Kumar was among those who drew a blank in his search for work in export factories. “There are no vacancies anywhere. Even companies are not hiring.”

Economist N.R. Bhanumurthy at New Delhi’s National Institute of Finance and Policy said the slowdown is now in a “full-blown phase.”

India economy
Construction workers face a lot of problem due to the weakening of Indian economy. VOA

There is a decline in the demand from the external sector, from the household sector and from the private sector,” Bhanumurthy said. “Given this kind of slowdown across the sectors of the economy, that is why we are seeing a very sharp slowdown in the overall growth.”

The government has announced a series of measures to boost exports and manufacturing, as well as revive the housing sector, including a fund of nearly $1.5 billion to complete unfinished housing projects. It has cut taxes for the middle class in a bid to spur consumer spending.

While such steps may lead to a nascent recovery, economists do not expect a significant rebound.

They said it will be difficult for Prime Minister Narendra Modi to meet his goal of propelling India into a $5 trillion economy by 2025 or providing jobs for the millions entering a work force in a country where two-thirds of the population is under 35.

Both targets would require India to grow at more than 8% a year, and there are no signs of such a dramatic pickup on the horizon.

“When this $5 trillion target was fixed we were not sure it was based on any analysis,” said Bhanumurthy. “It maybe (was) a wishful kind of target.”

It has been a steep fall for India, which, until a year ago, was the world’s fastest growing major economy with a plunging poverty rate.

Also Read- More than 50% Young Women are Distressed About Their Sex Lives

Those searching for work in Gurugram said times are the hardest in recent memory. “I have to pay $70 for a room, then I have to buy rations daily. If I don’t earn, how will I afford anything?” a woman named Reshma asked as she waited at the city intersection. Her eyes remained fixed on the road as she hoped that a builder who needed an extra pair of hands would stop. (VOA)