2019 is about to come to a meaningful end. It will be remembered as a momentous year from the perspective of governance and politics given the second term of Narendra Modi government.
Amidst the discussion around the economy, we bring you the top ten decisions of the government in 2019 that made an impact on the economy.
A special gift to all tax payers came in the Interim Budget of 2019-20. After considering all the deductions and investments, if your taxable income is below five lakhs, there’s no income tax for you!
Corporates were facing capital constraints. With all other cess and surcharge, corporates paid anywhere between 30-40% tax. The government simply brought corporate tax to 22%. For new domestic manufacturing companies, it has been further lowered down to 15%. The money saved will be invested in business creating jobs for us all.
We have been hearing how banks were drowning in bad loans. But the actions of Modi government helped banks recover loans. NPAs which were rising for the last decade, reduced for the first time in 2019. From their peak of 11.3% in early 2019, they are around 9% at the end of 2019.
Read our article Has Insolvency Code Tamed The NPA Demon? For more on the issue.
Dealing with a tax officials face to face can be harrowing. It would also often lead to cases of harassment and bribery. Well, Modi government is making the process faceless and transparent. For all tax related issues, it launched faceless e-assessment to eliminate human interface. You will communicate only with a computer program and get going, without fear or favour!
We all hear about youth being future of India. Is India harnessing this strength? A report by NASSCOM says yes. India is the third largest destination for startups. 1300 startups were added just in 2019. Government also abolished angel tax for startups easing venture capital fund flow.
Everyone likes free trade with lesser custom duties and tariffs. RCEP was one such pact with ASEAN nations, China, Japan, etc. But was it beneficial? It stood to harm India’s domestic industry and would have opened floodgates for cheap Chinese goods in Indian markets. India boldly opted out of RCEP, for the sake of our own local manufacturers.
Our article Why Did India Decide Against RCEP? Here Are the Reasons You Need to Know will tell you more on this issue.
Banks have been a tough place for reforms. Government fulfilled its 2.5 lakh crore recapitalization drive. It announced 27 Public Sector Banks to be merged into 12 entities.
For more, read our article Mega Banks Merger – A Step Towards $ 5 Trillion Economy
IBC was aimed at recovering big NPAs from defaulting companies. IBC not only recorded highest recoveries as compared to earlier mechanisms, it also resolved major cases. Imagine a big company like Essar Steel owing more than Rs 40000 crore as debt. Due to IBC, Arcelor Mittal took over Essar Steel and banks got back all their dues. This money will now be lent further to deserving businesses.
The need of the hour is to balance the interests of employers and employees. How has the situation been in this regard? Labour laws were restrictive and needed reforms. The Government simplified and consolidated 44 labour laws into four labour codes. Out of the four, code on Wages and Operational Safety and Health has already been passed. In the next step, the government introduced a combined code for Industrial Relations. This will enable ease in hiring process and also secure labour rights.
India inched up in the World Bank’s Ease of Doing Business. From its dismal 142 rank in 2014, India now ranks 63rd out of 190 nations.
Phew! But hold on. There are still a few days for 2019 to get over. Let’s hope we won’t be forced to add an eleventh item given PM Modi’s penchant for making surprise announcements.