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Structural reforms, a key priority of the Government, says Sitharaman
New Delhi, August 25, 2020
Union Finance Minister Nirmala Sitharaman today stressed that structural reforms were a key priority of the government as has been reflected in the slew of measures and policies announced since the COVID-19 outbreak.
Addressing captains of the Indian industry, the Minister said every policy that was introduced had a structural component. Consequently, the reforms were having a significant impact on the recovery process currently being witnessed.
To speed up the process, the Home Ministry has directed the state governments not to impose any curbs on the movement of people and inter-state movement of goods & services. “There cannot be a better time for exemplary cooperation between the government, regulators and industry to ensure that India comes out from the present crisis,” she added.
Taking cognizance of the fact that many sectors such as Tourism, Hotels & Hospitality, Real Estate & Construction and Airlines have been disproportionately affected by the pandemic, the Finance Minister said these were critical sectors with significant multiplier impact on the economy. To ease the pain of a few of these ailing sectors, the Standard Operating Procedures (SoPs) for the hotels, banquets & related activities will be looked into, she assured.
On the issue of strategic disinvestment, Sitharaman stressed the need to move fast on Cabinet cleared disinvestment decisions.
Regarding the private investment cycle which got a fillip from the corporate tax cut in September 2019, she said the investments could not take off due to outbreak of COVID-19. She was of the view that in a post-COVID world, these should fructify.“With post-COVID reset happening, the emphasis has to be on adoption of data-driven manufacturing models through ploughing greater investments in these models,” she added.
On the issue of local manufacturing, she said productivity-linked incentives (PLIs) scheme has met with excellent response and has helped speed up manufacturing of critical bulk drugs and APIs in six states.
On delayed payments by the government agencies, the she said the Finance Ministry was holding periodic reviews to expedite the due payments to the industry. Further, the Finance Minister alluded that the infrastructure sector plays a key role in speeding up growth momentum. Hence, to give its financing a further boost, external funds will also be welcome.
Responding to a question about the need for lowering GST rates on 2-wheelers, she said it was a good suggestion as this category was neither a luxury nor a sin good and hence merited a rate revision. The matter will be taken up with the GST Council, she added.
Uday Kotak, President, CII, in his opening remarks, highlighted that ample signs of a nascent recovery from the lows seen in April-May were a result of the supportive steps taken by both the Central Government and RBI. However, the localized lockdowns implemented in many States have given rise to supply-side bottlenecks, which could impede growth when the demand side cranks up.
The government-owned institutions like NABARD, SIDBI and NIIF had the potential to evolve into development finance corporations to support recovery, he added.
Chandrajit Banerjee, Director General, CII in his welcome remarks highlighted the continual support from the government in assisting the industry to navigate through the difficult times.