Rs 10,000 crore fund for affordable housing, mega shopping festivals to boost exports: FM Nirmala Sitharaman

NEW DELHI: Finance Minister Nirmala Sitharaman on Saturday said that the Indian economy is in good shape and there are clear signs of revival with robust FDI inflows and high forex reserves.

''Inflation is under control and there is a clear sign of revival of industrial production,'' the FM said. She said that a series of measures have been taken to provide relief to the economy. The FM said that inflation has been consistently held below 4%, which shows the health of the economy.

Finance Minister Nirmala Sitharaman: Inflation is under control and there is a clear sign of revival of industrial production. pic.twitter.com/IMG0cqvRnA — ANI (@ANI) September 14, 2019

Foreign Direct Investment (FDI) inflows are robust as of now and there is a sign of revival. Forex reserves (Foreign exchange reserves) have gone up particularly in August end, the FM said.

Shifting her focus to the banking sector, the FM Sitharaman said that on September 19, she will meet chiefs of public sector banks to address the problems faced by the sector.

''NBFCs are receiving benefits of the partial credit guarantee scheme announced earlier,'' Sitharaman said. Partial credit guarantee scheme has already been implemented, she added.

''The govt will offer higher insurance cover to banks lending working capital for exports in a move which will cost Rs 1700 crores per annum to the government, she informed.

In a big relief for exporters, the FM said, ''the scheme of Remission of Duties or Taxes on Export Products (RoDTEP) is a new scheme, it shall completely replace all Merchandise Exports from India Scheme (MEIS) from January 1, 2020.''

Among other measures, the FM said that Export Credit Guarantee Corporation will expand the scope of ECIS and will offer higher insurance cover. The move will cost Rs 1700 crores per annum to the government, she said.

Sitharaman said that the government is working to reduce 'time to export' by leveraging technology further; an action plan to reduce turn around time at airports and ports benchmarked to international standards to be implemented by Dec 2019 & Inter-Ministerial group will monitor this.

The measures being announced today are expected to provide a boost to the real estate and automobile sectors, aside from generating more liquidity and demand in the economy, the FM said. 

The FM informed that a fully automated GST input tax credit refund system will be ready by the end of this month. Small and medium exporters will get their input tax credit refunds quick, and will not have their working capital stuck in pending dues.

In a big relief to the small taxpayers, she said small offences do not need to go through the prosecution rank. ''Whether or not an income tax error has to be prosecuted will be decided on the basis of the quantum and severity of the offence. Minor errors will be exempt from prosecution,'' the FM said. 

The Finance Minister said that the technology in tax collection will reduce harassment from authorities. 

After announcing major relief measures for the export sector, in six parts, Finance Minister Nirmala Sitharaman turned her focus to the housing sector and announced a special Rs 10,000 crore window to extend funding to incomplete housing projects. Fund of Rs 10,000 crore will be contributed by Government of India (GoI) and roughly same amount from outside investors, the FM said.

A special window to provide last mile funding for housing projects which are non-NPA (Non-performing asset) & non-NCLT (National Company Law Tribunal) projects & are net worth positive in affordable and middle income category to be set up. The objective is to focus on the construction of unfinished units.

The FM continued by saying that External Commercial Borrowing  (ECB) guidelines will be relaxed to facilitate financing home buyers who are eligible under the PMAY (Pradhan Mantri Awas Yojana). This is an addition to the existing norms for ECB for affordable housing. 

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On Free Trade Agreements, the FM announced the setting up of FTA Utilisation Mission headed by a senior officer in Dept of Commerce, to work with FIEO and export houses to utilise concessional tariffs in each FTA.

''Working group in Commerce Ministry will be set up to set standards for imports,'' the FM said.

In a major move, the FM said that India shall have mega shopping festivals, just like that in Dubai in four destinations, by March 2020. The themes can vary such as Gems & Jewellery, Handicraft, Yoga, Tourism, Handicraft, and more, the Finance Minister said. FM added that the move will boost textiles, leather industry & promote yoga tourism.

The FM said this while addressing a press conference during which spelled out various measures being taken by the Narendra Modi government to arrest the slowdown that has gripped India’s economic growth. 

The announcements from the FM come as the Indian economy is grappling with a sharp slowdown. In the most recent quarter, GDP growth slowed to a six-year low of 5%. Many sectors like auto and real estate are grappling with a sharp slowdown in demand. In recent weeks, the government has announced a slew of measures, including front-loading of public expenditure, and improved access to credit for businesses and capital infusion into state-run banks to boost credit.

The government had also eased foreign direct investment (FDI) rules in many sectors to get economic growth back on track.

The Reserve Bank of India has cut projected GDP growth for this fiscal to 6.9%, while most analysts and financial institutions have estimated 6.5-7% growth.

Earlier, last month, Nirmala Sitharaman announced a slew of measures in two highly-watched press conferences. 

Big mergers of PSU banks, recapitalisation of PSU banks, the recommendation of interest rate cuts, withdrawal of tax surcharge on FPIs (foreign portfolio investors) and relaxing FDI norms on contract manufacturing and single-brand retail sector, are among a few important decisions that the government has taken to pump liquidity and to boost domestic demand. 

In her last press conference, Nirmala Sitharaman had said that the government is fully aware of the ongoing slowdown and is taking measures to revive economic growth.