New Delhi: The government is open to announcing more measures to stimulate demand in the economy, a senior finance ministry official said Tuesday, a day after the government announced measures to boost consumer spending.
“We are not ruling out further measures if required,” said the official who did not wish to be identified.
The government has been stressing on the need for a fiscally prudent approach at a time when several economists have suggested the Centre should increase spending to revive the economy.
The finance ministry Monday announced a host of measures, including a scheme that encourages government employees to spend on buying consumer durable items through a tax-free cash voucher scheme issued against leave travel allowance. It also brought back the festival advance scheme for government employees. But the schemes will not have any additional fiscal implications.
The government and the Reserve Bank of India (RBI) have, so far, announced stimulus package amounting to nearly Rs 22 lakh-crore. But most of this support has been in the form of liquidity support measures, with only a small fraction of the amount through direct cash transfers.
The Indian economy contracted by 23.9 per cent in April-June and is expected to contract in the second quarter as well but by a lower magnitude. In the third bimonthly monetary policy review announced Friday, the RBI projected that the Indian economy will contract by 9.5 per cent in 2020-21.
Disinvestment target
The official also said the sale of government’s residual stake in the IDBI Bank is on track, and so is the listing of the Life Insurance Corporation of India at the stock exchanges. However, the official did not comment on whether the government will be able to meet the March 2021 deadline.
The government is all set to miss the Rs 2.1 lakh-crore disinvestment target in 2020-21 with Covid-19 disrupting the asset sale process.
Also read: India will not meet its Rs 2.1 lakh crore disinvestment target in 2020-21, DEA secretary says
No decision on Vodafone appeal yet
The government is yet to decide if it will appeal against the arbitration panel award against India in the Vodafone retrospective tax case, the official said.
Last month, Vodafone had won a Rs 20,000 crore retrospective tax battle against the Indian government in the Permanent Court of Arbitration in The Hague.
Vodafone won an appeal against the government under the bilateral investment promotion agreement (BIPA) between India and Netherlands. But the Indian government is of the view that taxation matters are not under the purview of the BIPA.
“It is the duty of the government to look at all these aspects before arriving at a final decision,” the official said.
Also read: Modi govt has run out of excuses to delay disinvestment — even stock market is ready
Government deserves this penalty. Modi has destroyed Indian telecom market to Favor Reliance. Let’s be open, vocal and direct about it. Electoral bonds have to be made illegal. Retrospective taxation is destructive. Politicians should be tried in court for interfering with corporates and market to favor their sponsors.
The very first thing Modi needs to do is STOP micromanagement and allow cabinet to function in dynamic manner. His personal rivalry with Mr. Jaswant Sinha is costing the nation dear. We need a credible, autonomous Finance minister. Enough of experimentation. Modi is behaving like spoilt manager who think himself as master of all. Demonetization to GST, he destroyed every good initiative due to his dictator style implemention.