Recession
What is a Recession:
- A substantial decline in a country’s overall economic activity is referred to as a recession in macroeconomics. When the GDP along with other monthly measures like employment show that the economy has been contracting for two consecutive quarters, it is typically acknowledged. India is in a recession as a result of GDP growth hitting a nearly five-year low of 5.8 percent in January–March. The quarter from July to September saw the slowest GDP growth in 26 quarters, with an official estimate of 4.5 percent. To address the recession and slowdown, the government has implemented a number of measures.
The following steps have been made by the government to combat the country’s persistent recession:
- Investors: The domestic equities market surcharge and the additional FPI surcharge have both been removed.
- In order to encourage investment in the capital market, it has been decided to abolish the additional fee imposed by the Finance Act (No 2) Act 2019 on long- and short-term capital gains resulting from the transfer of equity shares.
- Aadhaar-based KYC is necessary in order to open Demat accounts and make mutual fund purchases.
- The administration will talk to RBI to increase the potential for credit default swaps.
- Industry: Instead of being tried as a criminal offense, a violation of CSR would be treated as a civil offense.
- To encourage increased credit distribution by the banks and spur private investment, the government has decided to front-load the Rs. 70,000 crore capital infusion in public sector banks that was promised in the Budget. An additional Rs. 5 lakh crore will be available for loans as a result of this Rs. 70,000 crores.
- GST refunds must all be paid within 30 days if they haven’t already been. Future GST refunds must be paid in full within 60 days.
- Automobile sector: To be operable for the period of registration, BS-IV vehicles must be purchased by March 2020.
- Older vehicles must be replaced by government organizations.
- A higher car registration price will not be charged until June of the following year.
- Depreciation increases to 30% for all vehicles acquired through March 2020.
- MSMEs: The government has eliminated the tax policy that favored startups and investors.
- There is a one-time settlement policy for MSME loans. A policy with checkboxes is anticipated.
- To assure a single MSME definition, laws must be modified.
- NBFCs now have the option to use KYC based on Aadhaar.
- The National Home Board increased to Rs 30,000 crore its supplementary liquidity to support housing finance companies.
- The government would release Rs 70,000 crore in advance for the recapitalization of PSB.
- loans for homes and cars
- Banks must reduce the fees for housing and vehicle loans. The banks would pass on to clients the rate reduction that the RBI announced. Banks will provide loans that are based on the repo rate.
- The present $100 billion line of credit for Housing Finance Companies will be increased by $200 billion by the National Housing Bank (HFCs). As a result, HFCs will get additional liquidity at reasonable prices.
- Online loan tracking is available for auto and mortgage loans.
- The loan documents must be returned to the consumer by PSBs within 15 days of the loan’s conclusion.
Moving ahead:
- The RBI and the government’s monetary policy stimulus, along with the usual monsoons, would provide some solace in the second half of the fiscal year.
- The government may prioritize giving exporters perks tailored to their industry and streamlining GST refunds.
- Fiscal spending must be raised, the target for the fiscal deficit must be exceeded, and consumer confidence must increase to reverse the negative trend.
- Employees in the automotive sector require incentives to increase their understanding of electric vehicles.
- Prioritization must be given to enhancing the flow of credit to individuals and businesses.
- There are several things there that will boost consumer and market sentiment.
- Strategically, actions must be taken to eliminate payment delays, remove the additional tax on domestic and international portfolio investors, assure the transfer of lower repo rates, and give bank authorities confidence in lending.
