New Delhi: With gross domestic product (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.
In addition, she announced the launch of a mega shopping festival, to be held next year in the country.
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 Rs500 billion.
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 up to 2 per cent over MEIS will transit into RoDTEP from January 1, 2020.
Sitharaman also announced the bid 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 Rs17 billion 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.
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 Rs100 billion 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.