THE GREAT SLOWDOWN (PART 2)
India's growth is slowing down every successive quarter. Factories and plants are shutting down. People prefer to save more. Check out The-great-slowdown-part-1
to know why all this happened.
To speed up the economic cycle, the government can either pump more money into the economy or reduce how much they take from us by way of taxes. So they have taken a whole raft of measures from time to time to bolster the economy.
1) The corporate tax rates were slashed to 22% from 30%. The companies can save crores from this measure. Hence, the market reacted positively on the day of announcement.
2) To encourage economic activity and boost consumption expenditure, the Finance Minister planned to hold Annual mega shopping festivals in 2020 which mainly focuses on jewellery, textiles, tourism, handicrafts etc. ( Fill your wallets :D)
3) Public sector banks will be merged to create a larger and stronger one. Indian Bank will be merged with Allahabad Bank. Canara Bank with Syndicate Bank. PNB, OBC and United Bank as one. Union, Corporation and Andhra as one bank. This will reduce the number of PSBs from 18 to 12. This is also considered a major step towards achieving the $5 trillion economy.
4) To increase the money supply and make loans cheaper, the RBI had reduced repo rates five times in a row with current rate at 5.15% p.a. But unfortunately, it did not work as expected because a cut in bank's lending rate would reduce their revenues. So the commercial banks did not pass on the benefit of lowered repo rates to their borrowers.
5) Many home buyers were in stress as the builders who promised to deliver the property in a year did not even complete the construction. So the government announced that Rs.10,000cr. will be provided to housing sector to complete the ongoing housing projects that focus on middle income groups. Also, the interest rates on housing loans will be lowered.
6) A series of measures were taken to promote the export sector. Exporters were given higher insurance covers. Many of the export procedures and money transactions will be made digital to increase efficiency and transparency.
This is just an overview of the innumerable measures. However, such policies only when combined with effective implementation proves to be fruitful.
to know why all this happened.
To speed up the economic cycle, the government can either pump more money into the economy or reduce how much they take from us by way of taxes. So they have taken a whole raft of measures from time to time to bolster the economy.
1) The corporate tax rates were slashed to 22% from 30%. The companies can save crores from this measure. Hence, the market reacted positively on the day of announcement.
2) To encourage economic activity and boost consumption expenditure, the Finance Minister planned to hold Annual mega shopping festivals in 2020 which mainly focuses on jewellery, textiles, tourism, handicrafts etc. ( Fill your wallets :D)
3) Public sector banks will be merged to create a larger and stronger one. Indian Bank will be merged with Allahabad Bank. Canara Bank with Syndicate Bank. PNB, OBC and United Bank as one. Union, Corporation and Andhra as one bank. This will reduce the number of PSBs from 18 to 12. This is also considered a major step towards achieving the $5 trillion economy.
4) To increase the money supply and make loans cheaper, the RBI had reduced repo rates five times in a row with current rate at 5.15% p.a. But unfortunately, it did not work as expected because a cut in bank's lending rate would reduce their revenues. So the commercial banks did not pass on the benefit of lowered repo rates to their borrowers.
5) Many home buyers were in stress as the builders who promised to deliver the property in a year did not even complete the construction. So the government announced that Rs.10,000cr. will be provided to housing sector to complete the ongoing housing projects that focus on middle income groups. Also, the interest rates on housing loans will be lowered.
6) A series of measures were taken to promote the export sector. Exporters were given higher insurance covers. Many of the export procedures and money transactions will be made digital to increase efficiency and transparency.
This is just an overview of the innumerable measures. However, such policies only when combined with effective implementation proves to be fruitful.
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