In a remarkable move that was seen as the need of the hour, the Finance Ministry announced a much-needed cut in the rates of corporate taxes at the 37th GST council meeting being held in Goa. Along with the corporate tax cut, rebates in terms of GST levied on goods were also revealed as well. In one stroke, the Finance ministry led by Nirmala Sitharaman seemed to have wiped out most of the woes that were of grave concern for the Indian economy. Congress had one real opportunity in the form of the current economic slowdown which it missed.
The stock market responded most remarkably, as the Mumbai Stock Exchange aka SENSEX jumped up by a mammoth 2127 points, the highest gain ever made for a single day.
However, it wasn’t the same for the opposition, who felt as if they were ‘robbed off’ a god-sent opportunity to nail the government. This reflected in the rants of ex-Congress supremo Rahul Gandhi, who tweeted as follows –
Amazing what PM is ready to do for a stock market bump during his #HowdyIndianEconomy jamboree.
At + 1.4 Lakh Crore Rs. the Houston event is the world's most expensive event, ever!
But, no event can hide the reality of the economic mess “HowdyModi” has driven India into.
— Rahul Gandhi (@RahulGandhi) September 20, 2019
Rahul’s sentiments were echoed by many left-liberals, who were unable to accept the fact that the Central Government had ‘outsmarted’ them by snatching an opportunity to corner them based on a ‘wobbly economic performance’ by announcing the financial reforms.
“Howdy” economy doin’,
— Rahul Gandhi (@RahulGandhi) September 18, 2019
From Asaduddin Owaisi, who once again wailed about how this scheme ‘robbed the poor to reward the rich’, to Raghav Bahl, who alleged that the benefits of the reforms are not reaching the ‘right’ people, here are some of the examples of how the left-liberals are feeling aghast by this bold decision from the Central Government –
Worth a read: https://t.co/vNJsvfljqJ
— Rajdeep Sardesai (@sardesairajdeep) September 20, 2019
But what are the tax reforms all about? How is the proposed cut in the corporate tax benefits the economy? According to media reports, the Finance Ministry has announced to cut the corporate tax rate for domestic companies to 22 per cent (inclusive of all cesses and surcharges) for the domestic companies from the existing 30 per cent. New domestic manufacturing companies, which will be incorporated after October 1, will be asked to pay only as little as 15 per cent rate provided they start manufacturing by 2023 – that is, a year before the next general elections.
Whether this cut will work wonders is something only future knows well, but the magnitude of the cut cannot be underscored. This cut in the corporate tax rate comes after a gap of almost 15 years. Moreover, this tax rate cut brings some crucial changes well – It increases the profitability of companies in India, leaving them with extra cash to invest. Not only that, but it also restrains ‘India Inc’ from demanding more sops, compelling them to invest. Moreover, it creates a feel-good sentiment and sends a strong message about the government’s faith in India Inc, which means that the word corporate is no more a pariah for the Central Government.
Another aspect of these financial reforms is that even though it shall initially put some pressure on the Central Government in terms of the fiscal position in the short term, but better tax compliance will lead to greater revenues after this tax break. It will not only invite huge investments but also compel major multinational companies to move their units to India from around the world, especially China, which will effectively help India in capitalizing the trade war to their advantage.
As such, with these reforms, the Central Government snatched the only real moment the Congress and their cabal of left-liberal journalists and intellectuals had to target them. Ever since PM Modi assumed the post of PM in 2014, the Congress-led opposition has tried their best to target the Government, but in vain.
In case they managed to nail the government, they did so on extremely flimsy grounds, with no base of concrete facts or irrefutable pieces of evidence. From the laughable theory of intolerance against minorities to the mega ‘Rafale scam’ that was built based on mere allegations posed by Rahul Gandhi, the Congress-led opposition talked about everything except the actual issues that could give the NDA government some jitters.
As such, the opposition had one real opportunity in the form of the current economic slowdown, even if based on misleading data that portrayed the slowdown as a potential recession. However, to their disappointment, the Central Government denied them that ‘sole’ opportunity as well with the current slew of financial reforms. It seems that the current government means business, with no room for distraction by the wily opposition, even if for a single second.