With the singular objective of pulling the economy out from the on-going state of deep recession, slew of initiatives are being taken by the FM these days. Measures that had been announced as of now can be categorized as moderate to semi-moderate and even near-extreme. But last Friday’s bouquet which contained some solid tax cuts for the corporate sector had been extraordinary by any yardstick, prompting many observers to term it as a sort of mini-budget. But judging matters in the light of the current realities, this step can never be called as unprecedented and it will not be amazing either, if such ‘actions’ are further unleashed.

It’s nothing secret now that recession is not restricted to the most talked-about sectors of automobile, housing and a few others alone. That which was initially perceived to be ailments specific to these sectors have now diffused rapidly to almost all remaining core areas which have started feeling the pinch too. As a consequence, cumulative effect had been reflected through a back-to-back dipping GDP, last one being the nadir at 5%. Coming to this announcement, the big takeaway is slashing of rates, after which effective corporate tax will be 25.17 % applicable for current fiscal year retrospectively from April 1, 2019. Additionally, in an announcement that is aimed at kick-starting investment cycle in India Inc., new manufacturing companies starting operations after October 1, 2019 will now have to pay an even lower corporate tax of a little over 17%. According to analysts, this step has got every chances of giving long-term dividend to the economy since US-China trade war is at its peak, compelling many MNCs to re-think investment strategies and search alternate manufacturing bases. Overall, the new corporate tax regime will also put India on an equal footing with many East Asian countries, thus making it more globally competitive for attracting investments.

Everything has got a cost and in this case it will be a whopping Rs 1.45 lakh crore of revenue that Centre will have to forego, straining the ever-sensitive issue of fiscal deficit. It’s no less a gamble that has been played with hopes that it will ultimately pay off through boosting of investments, employment generation and at the end revival of the sagging economy. These cuts, although apparently look generous, have been initiated under extreme compulsion. But still, even if its objectives are reached, it would take care only of the supply side of the economy. For making the revival all-encompassing, it’s necessary that demand side must also be addressed adequately so that the purchasing power that had virtually vanished from the consumer class, returns.

As of now, there is no option but to keep fingers crossed for expected results. 

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Kenter Joya Riba

(Managing Editor)
      She is a graduate in Science with post graduation in Sociology from University of Pune. She has been in the media industry for nearly a decade. Before turning to print business, she has been associated with radio and television.
Email: kenterjoyaz@easternsentinel.in / editoreasternsentinel@gmail.com
Phone: 0360-2212313

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