Prime Minister Narendra Modi is set to meet the finance ministry on Thursday to take a call on a possible stimulus package to revive the slowing economy. The finance ministry will brief the PM about the economic situation and the issues faced by various sectors and will also suggest possible measures to address the concerns of corporate India. According to a report in a business daily, the meeting may result in a significant stimulus package including incentives to boost demand, some industry-specific measures such as a cut in GST for the auto sector and relief for portfolio investors from the higher surcharge announced in the budget. Worth mentioning here is that over the past couple of weeks, the finance ministry was taking stocks of the economy by meeting representatives from various sectors to understand the problems faced by them and to find out solutions to their problem. This move came after concerns over the economic slump and falling consumer sentiment, which have triggered calls for an urgent intervention by the government. The Reserve Bank of India (RBI) and the International Monetary Fund are among those that have cut growth forecasts.
The prime minister will take a final call on measures that could form part of a package, the business daily said. In an interview given to the business daily on August 12, PM Modi had said that private sector must continue to believe in the India story and pledged to do his best to make the country a better place to do business. Today’s presentation to the PM will cover key sectors including the financial markets, automobile and small and medium enterprises besides the challenges faced by industry in general such as plummeting demand and lagging investments, a government source aware of the development told the publication. Foreign portfolio investors have lobbied for a rollback of the super-rich surcharge and removal of long-term capital gains tax on equities while the automobile sector has pitched for a reduction in GST to 18% from 28%, a lucrative scrappage policy and reduction in other charges such as registration and road tax to boost sliding passenger vehicles sales. PM Modi will take the final decision on whether the Centre should propose a cut in GST on vehicles in line with revenue considerations. Other measures that could be presented by the finance ministry include incentives for the purchase of new public transport vehicles for tier 2 cities as well as at district and block level. The Centre could also look at encouraging states to lower road tax and registration charges, the business daily mentioned.