In the midst of a decline in economic growth, NR Bhanumurthy, professor at the National Institute of Public Finance and Policy, a well-known economist of the country, has said that the government needs more fiscal measures to help accelerate economic activity in the country more than reducing policy interest. is. Bhanumurthy said that it seems difficult to get any better result at this time by monetary measures. "The Indian economy could affect savings decline in the interest rates is focused savings. Interest rates if there will be less will have an effect on saving. Reduced savings can have an impact on investment.
The Reserve Bank has so far cut the key interest rate to 1.35 percent so far this year, but it did not see a favorable impact on investment. The Reserve Bank of India Monetary Policy Committee is scheduled to announce its bi-monthly review on 5 December. The market expects the central bank to continue its liberal monetary stance given the economic slowdown. Some analysts feel that the RBI policy may also reduce the interest rate further. Bhanumurthy said that the steps taken by the government to improve the economy since July this year will be reflected from the third quarter.
It is being told that the government recently drastically reduced the company tax rate for companies by about 10 percent to 22 percent. The tax rate was increased to 15 percent for companies coming into the manufacturing sector. Earlier, companies had to pay a total tax of 34 percent. New capital was provided to banks to strengthen their capital base. A package of Rs 25 thousand crore was given to start the projects stuck in the real estate sector. Supplementary grant demands were introduced to increase spending and banks were asked to increase credit availability to NBFCs to increase liquidity in the system. According to the government data released on Friday, the growth rate of gross domestic product (GDP) fell to 4.5 in the second quarter of July-September 2019 of this financial year.
It was 5 percent in the first quarter. The growth was 7 percent in the second quarter of the last fiscal. Bhanumurthy said, "There is no possibility of the economy falling further now. The economy will start improving from the third quarter. However, despite this improvement, the fiscal deficit during the current financial year is expected to be higher than the budget estimate. He also said that the fiscal deficit during the current fiscal year seems to be almost fixed but the government cannot cut it much due to the commitments of long-term plans. The government has projected a budget deficit of 3.3 percent of GDP during the current fiscal. It was 3.4 percent in the previous year.