Yes, the cut in corporate taxes did give a shot in the arm to the Dalal Street Bombay Stock Exchange, but whether it was able to change the dipping and sagging sentiments in the market can only be felt in at least next three quarters.
It becomes extremely difficult to restore the confidence and sentiments of the market after a nagging slowdown despite efforts like bank mergers and injection of Rs 70,000 crore to public sector banks. Even the Reserve Bank of India (RBI) in late August transferred Rs 1.76 lakh crore to the Union government from its surplus reserves. It is the highest-ever surplus amount transferred by the RBI to government and since 2013-14, the RBI has been paying 99 per cent of its disposable income to the Union government.
It is expected that the receipts from the RBI will give a fillip to the government’s efforts to boost the economy from a five-year low. Finance Minister Nirmala Sitharaman had recently announced a slew of measures to prop up growth even as the government tried to stick to the target of keeping fiscal deficit at 3.3 per cent of the Gross Domestic Product (GDP). The additional cash will now give the Centre more headroom for stimulating the economy. The GDP is as low as 5 per cent and the target to reach a five trillion dollar economy by 2024 looks a distant dream. At this growth rate we can only reach the desired five trillion dollar economy not before 2060.
The matter is serious and that is precisely the reason why the Union Finance Minister is calling for a press conference with an announcement of an ‘amendment in the July budget’ or even fresh announcement. It is a healthy sign but not a good precedent being set for the following governments. In fact it will also scrape the element of confidence from the common man on the Union budget.
What happened to the Union budget presented this year in February before elections is still a mystery as it was a full-fledged budget and not vote-on-account as it is normally done when the government’s term is ending before the end of the financial year. Even the opposition during the general election failed to bring these issues forcefully before the public.
With the opposition virtually bereft of any fresh ideas to launch a tirade against the National Democratic Alliance (NDA) government led by Bharatiya Janata Party (BJP), it is now, a golden opportunity for the Congress to grab it with both hands and raise the issue of a sagging economy before the common man. Aptly so, they have started doing it at the grassroots level bringing in economists and academicians to prove to the commoners how the data is being played and ‘fudged’ by the NDA government to fool the people.
However, the Congress does also have a concern. It does fear to be trolled in an open platform or social media as anti-Indian, urban Naxal or even pro-Pakistani if they criticise the government on its performance on the economy. “We spilt Pakistan in two in 1971 and defeated them in at least three wars and yet we are called pro-Pakistan,” said the spokesperson of All India Congress Committee Gourav Vallabh on Saturday in Goa while addressing the Congress members on the state of Indian economy.
Periodic tweaking of the budget does prove that the initial thought process to present it in the Parliament, lacked not only clarity but also economic sense which led to the crash in automobile, real estate, manufacturing and even Ministry of Micro, Small and Medium Enterprises (MSME) sector creating a void and joblessness which will take a lot of time to regain. These losses can only be gauged in the formal economic sector while the data collection from the informal sector is a tough task in this huge country.
In fact, the Union government and its representative and senior minister Nitin Gadkari is now encouraging the MSMEs to enlist themselves in the capital market and raise money which will “boost the revenue for the country while investors will get good returns,” he said. But the question is, what is the Union government doing? Only patch work?
