The economy received a shot in the arm, as contrary to its perceived stance the Government swung right. It took the bold and decisive step of cutting tax rates by 10-25 per cent for domestic companies. For new manufacturing investments, companies can now avail of a tax rate of 17 per cent provided the new assets become operational before March 31, 2023. Old assets cannot be shifted out of existing units to new units to avail this. Other reversals of removal of surcharge on capital gains and connected with share buyback programs were part of the offerings. The total booster shot was to the tune of Rs 1.45 trillion.
This new tax rate regime puts us in business in comparison with our Asian peers. Corporate profits have been trailing for the past three years but this fresh dose will add 10 per cent to profits after tax (PAT) for corporate India. This also puts to rest the murmurs of ‘a socialistic stance’ that were getting louder by the day. Clearly, the Government has bet this largesse on growth. Additions to the bottomline will play out in the form of fresh investments and, therefore, generate employment. However, this stimulus is not an ‘instant voodoo’. It will pan out over the next six months and will set the direction for the future, affirming that India is welcoming and facilitating businesses. In the long run, only a rising economy will provide tax revenues to run social welfare programs.
Social improvement schemes have begun to show positive outcomes; for instance, Swachh Bharat. India has built 100 million toilets across 600,000 villages and another 6.3 million cities. The results indicate, as per reports provided by IPE Global and Kantar, that 93 per cent of people had access to toilets; people do not defecate in the open in 93 per cent of villages; 96 per cent of those who had access to toilets used them; all built toilets have been geo-tagged and can be verified; and, according to WHO & UNICEF, there is a dramatic reduction in cases of malaria and diarrhoea among children in areas that have been provided toilets.
At our SMART URBANATION event on September 24-25 in Bengaluru, over 45 smart cities participated and shared their stories of success. ‘Smart Cities have completed 20 per cent of all the 5,000 projects in 100 smart cities. Projects worth Rs 1.41 trillion have been tendered and the balance projects will all be tendered before March 2020, shared Smart Cities Mission Director Kunal Kumar, Ministry of Housing & Urban Affairs, Government of India, as he presented awards along with Anjum Parwez, Principal Secretary, Government of Karnataka.
Ease of paying taxes, arbitration and stalled projects are the hurdles yet to be addressed in as bold a manner as the Finance Minister dealt with the issue of tax rates. Some beneficial announcements like obviating the need for a bank guarantee by the private organisation when the arbitration award in its favour is being challenged have helped. But a lot more needs to be done.
Mining promises to be a new frontier—it is expected to grow four times in the next 10 years. This festive season, as the dust settles on tax terror, NBFC defaults and a dull consumer demand, a glimmer of optimism seems to be evident. INDIA CONSTRUCTION FESTIVAL on October 15-16 at ITC Maurya in New Delhi, in association with ENR magazine, will presents four block buster events:
- 9th India Roads Conference
- 17th Construction World/ ENR Global awards
- CW Leadership Summit
- 7th Equipment India awards
Check out www.IndiaConstructionFestival.com for the latest updates and book your seats to the event of the year in construction!