Economy needs more measures

In the wake of countrywide lockdown to contain the deadly coronavirus, Finance Minister Nirmala Sitharaman on Tuesday announced some steps to support businesses and lift sentiment.

Many expected the Finance Minister to come out with a full-fledged economic revival package as the economy has been reeling under an unprecedented onslaught because of the crisis triggered by COVID-19, a communicable disease caused by coronavirus, which is crippling all the key sectors including travel, tourism, manufacturing and what not.

But the Finance Minister disappointed everyone by saying that a revival package would be announced later by Economic Task Force. Recently, the Central government constituted the Economic Task Force to assess the impact of the deadly pandemic on the economy and suggest remedial measures.

Perhaps, the Finance Minister came out with new steps, mostly related to tax and regulatory issues, to infuse confidence into Indian stock markets which have been on a roller-coaster ride in the past couple of weeks.

On Monday, India's stock markets collapsed with Sensex suffering its worst-ever crash. The benchmark index plunged 3,935 points, 13.15 per cent, to close at 25,981 points. NSE Nifty followed suit and nosedived by 1,135 points, or 12.98 per cent, to settle at 7,610 points.

Investors lost a whopping Rs 14.22 lakh crore on a single day. However, markets rebounded and ended in green zone after FM's announcement on Tuesday. But there is no guarantee that the latest steps will be enough to calm stock markets in long run.

However, some initiatives like extension of the deadline for filing GST returns for the months of March, April and May to June 30, will provide some relief to companies, especially MSMEs.

But the government should have extended the deadline for payment of last instalment of advance tax which was scheduled for March 15. That step would have provided big relief to companies which are reeling under the adverse impact of corona crisis.

Instead of extending the deadline, the Finance Minister said interest rate on delayed payments of advanced tax due on March 15 would be computed at nine per cent against the existing 12 per cent. This lower interest rate will be levied up to June 30 this year.

Apart from extending deadline for filing delayed IT returns for FY19 up to June 30, Sitharaman also waived minimum average balance fee being levied by banks on account holders for next three months.

This measure will put some extra money into the hands of people as they can withdraw all the funds available in their saving accounts. She also waived ATM withdrawal fees and digital transaction charges.

In recent days, there have been apprehensions in many quarters that the Central government might impose financial emergency in the wake of coronavirus impact. But Finance Minister ruled out such step.

Her announcement came as big relief for many. But the fact of the matter is that the latest measures are not enough to put the battered economy on a growth track. The Centre needs to do more. A comprehensive revival package is need of the hour.

As suggested by industry bodies, a Rs 2 lakh-crore stimulus package that puts more money into the hands of people is imperative to revive consumption demand so that economic growth picks up. Can the Modi government do that?