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created Feb 7th, 14:28 by bansod typing



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Finance Minister Nirmala Sitharaman reaching out to corporate India comes as a huge gust of fresh air. In an interaction with industry captains on Tuesday, she conceded government spends alone were insufficient to push forward growth, and there was a crying need for the private sector to invest liberally to kick start an era of rapid development. The tenor of the FM's speech was in the same direction as her solemn statement during the Budget, that wealth creators will be respected. She also spoke of providing a stable business environment. In concrete terms, she promised to amend the Income Tax Act to decriminalise civil misdemeanours. Sitharaman's angst about the private sector has a ring of truth. She has said the government has put its money where its mouth is by reducing corporate taxes to a record low of 15% for some categories. She has also scrapped the dividend distribution tax in the recent Budget, which was resulting in double taxation. But these measures don't seem to be yielding results, and we need to be worried. New private sector investment for the 2nd quarter ending 30 September 2019 fell to 38,000 crore, down 5% compared to the immediate earlier quarter; and compared to investments of 1.22 lakh crore for the year-ago quarter, it was down 70%.   
Much of the tax money being saved is not going into fresh investments as it is used by many companies to balance their loans. However, the continued sluggishness is a matter of worry. Unfortunately, the government needs to address some key issues before the trust quotient is restored. For instance, various enforcement bodies such as the tax department, ED and CBI have been on a raiding spree, not all of the forays being above board. There is genuine fear of being victimised, and it is the actions of the government in the future that will speak more loudly than words. The ever-changing regulatory rules that affect stability of business plans, and which have been underlined by foreign investors, too need to be streamlined.

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