Govt open to more tweaks in Rs 3 lakh cr credit guarantee scheme: FM

The two-wheelers are currently taxed at 28 per cent, and industry has been demanding lowering it to 18 per cent. On the private investment cycle, Sitharaman said that in September 2019, the government had reduced corporate tax rate but investments could not happen due to COVID-19.

Finance Minister Nirmala Sitharaman on Tuesday said the government is open to further tweaking the Rs 3 lakh crore credit guarantee scheme for providing collateral-free loans to small businesses. After a closed-door interactive meeting of CII with the minister, the industry chamber tweeted Sitharaman as saying that "The (Rs) 3 Lakh Crore scheme is open for professionals now and Government is open to more tweaking, changes if required".

Earlier this month, the government had widened the scope of the Rs 3-lakh crore credit guarantee scheme by doubling the upper ceiling of loans outstanding to Rs 50 crore and including certain individual loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit, apart from MSMEs. Till August 24, banks have disbursed loans worth more than Rs 1.05 lakh crore under the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which was announced as part of the Aatmanirbhar Bharat package.

According to a statement by CII, which was also issued by the finance ministry, Sitharaman also said that domestic revenue generation is a concern as sectors like tourism, real estate, hospitality, and airlines have been affected "disproportionately" by the COVID-19 pandemic. She said that these are critical sectors with significant multiplier impact on the economy.

"In order to ease the pain of few of these ailing sectors, the Standard Operating Procedures (SoPs) for the hotels, banquets and related activities will be looked into," she assured. Sitharaman said structural reform is a key priority for the government as has been reflected in the slew of measures and policies announced since the outbreak of COVID-19, and it will move fast on the Cabinet-cleared strategic disinvestment decisions.

"Every policy which was introduced had a structural component. Consequently, the reforms are having significant impact on the recovery process which we are currently witnessing," she added. Further, to facilitate the recovery process, the home ministry has given out directions to the state governments for imposing no curbs on the movement of people and the inter-state movement of goods and services.

"There cannot be better time for exemplar cooperation between government, regulators and industry to ensure that Indian comes out from the present crisis," she added. Sitharaman also said that two-wheelers are neither a luxury nor sin good and so merit a GST rate revision. The two-wheelers are currently taxed at 28 per cent, and industry has been demanding lowering it to 18 per cent.

On the private investment cycle, Sitharaman said that in September 2019, the government had reduced corporate tax rate but investments could not happen due to COVID-19. "With post-COVID reset happening, the emphasis has to be on adoption of data-driven manufacturing models through ploughing greater investments in these models," she further added.

Sitharaman said that Productivity Linked Incentives (PLIs) scheme has met with excellent response and helped speed up the manufacturing of critical bulk drugs and APIs in 6 states. The finance minister alluded that the infrastructure sector plays a key role in speeding up growth momentum, hence, to give its financing a further boost, external funds will also be welcome.

CII President Uday Kotak seeing ample signs of a nascent recovery from the lows seen in April-May as a result of the supportive steps taken by both the central government and RBI. "However, the localised lockdowns implemented in many States has given rise to supply-side bottlenecks, which could impede growth when demand-side cranks up," Kotak added.