Finally the package is out it may boost sentiment for a few days and will be forgotten thereafter
Read time: 6 min. Source: https://goldmine.co.in/finally-the-package-is-out-it-may-boost-sentiment-for-a-few-days-and-will-be-forgotten-thereafter/
1. Govt has withdrawn enhanced surcharge on LTCG and STCG. This might be minor relief and may boost sentiment in the short run.2. Some reliefs declared for startups, so not applicable to our universe of listed companies.3. About Rs 70000 crores will be released upfront to PSBs for additional credit facilities. That will boost PSU space.4. Govt to take steps for launch of credit deault swap funds.5. Govt will work with RBI to make bond market conducive to investors.6. Establish credit enhancement for infrastructure and housing projects.7. Liquidity support to HFCs increased to Rs 30000 crores.
To boost consumption1. NBFCs can use aadhar enabled KYC for onboarding customers2. More credit support to purchase of vehicles, houses and consumer goods.3. NBFCs are receiving credit from banks. PSB-NBFC synergy to be facilitated to reach last mile customer.4. NHBs to give Rs 20000 cro extra to Housing Finance companies.
For MSMEs1. All pending GST refunds to MSMEs will be sorted out within 30 days.2. All future GST refund issues will be sorted out within 60 days.3. Pending GST refunds to be paid in 30 days.4. Bank to issue one time settlement plans for MSMEs. This could hit banks but help MSMEs.5. Future GST refund matters will be sorted in 60 days.
For Auto Sector1. BS-IV vehicles purchased upto March 31, 2020 will all remain operational for their entire period of registration.2. Revision of one time registration fee deferred till June 2020.3. Additional 15% dep to be allowed on any vehicles acquired from now till March 2020 raising it to 30% in total.4. Both Evs and ICVs will continue to be registered.5. To boost demand for cars, govt to lift ban on purchase of new vehicles by govt department to replace old vehicles.6. Govt to consider measures including a scrappage policy to boost demand.
For Banking1. Another Rs 5 lakh crores will be released in a phased manner, which means release through reduction of CRR and SLR soonerthan later.2. Working capital loans for industry is going to be cheaper. 3. Aversion to risk taking at banks to be addressed. IBCs at banks to classify cases for vigilance and non vigilance to ensure no harassment of bankers making honest decisions.
Some Income Tax reforms for ease of scrutiny, assessment, notices introduced. Just for convenience and no relation to economy.
Overall some boost for Autos, which may or may not work due to low demand. People do not buy autos in general for depreciation purposes. Additional capital infusion at PSU banks will help them ease credit flow to NBFCs. However PSU bank officials have become risk averse and may not work in the short term. Slow release of 5 lakh crores for banks through SLR and CRR reduction in future could help economy to some extent. However most of the things seems to be a tall talk. The Government has not foregone any revenues and hence this package may at best boost sentiment for a fewdays and will be forgotten thereafter.
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