We all know how the topic of economic slowdown has entered the public domain despite the mainstream media trying their best to avoid this issue. This has also forced the government to take some necessary and bold steps to revive the economy and to fasten the pace of economic growth in India. Ms. Nirmala Sitaraman made some big-ticket announcements on Friday 20th, 2019 after which the Sensex and Nifty jumped more than3 percent. This created a sensation in the market and while speaking with the reported of Policy times Prof. Anurag Agnihotri explained how it might bring a positive impact on the mindset of the investors.
Cutting down the corporate tax will cause a revenue loss of Rs. 1.45 lakh crores to the government but this news became an instant hit among the investors and the stock market embraced it with open arms. Prof. Agnihotri told that this will decrease the further downfall of the economy and will improve the data for October. He also said that the industrialists might give some advantage of the corporate tax cut to the consumers as well.
While explaining to the reported, Mr. Agnihotri said that the capital market is made up of three C’s viz. Cash, courage, and cut given by the government. He explained that the government had already provided the cash by decreasing the repo rate and by cutting down the corporate tax it has shown that it can take courageous decisions. He also mentioned that it is the first time in Indian history that such a major declaration is taken outside the budget.
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Prime Minister will try to encourage foreign investment in India and this is not possible without making India a tax-friendly country, Mr. Agnihotri said. The tax rate cut will allow the companies to invest in more businesses and they will try to provide some rate cut to the customers as well. Manufacturers especially those manufacturing consumer goods might not offer this rate cut immediately but they will use it to invest in other avenues which will induce growth in the economy.
Also, he said that the nifty which would have gone down up to 9.5 to 10 thousand points in October 2019 might stabilize to 11 to 11.5 thousand points due to the tax reforms introduced by the finance minister. He also admitted that the ‘Howdy Modi’ tour of Narendra Modi and these reforms are in sync and will help to attract investors in the future.