NEW DELHI:The government is likely to soon announce fresh measures, including big-ticket infrastructure projects and policy changes, to make local industry more competitive, as part of efforts to rebuild the economy in the wake of the Covid-19 pandemic, said people with knowledge of the matter.
Prime Minister Narendra Modi may himself unveil some of these steps, which could also include an initiative to reorient the tax administration, said government sources. The measures could be announced as early as August 13, they said.
The move to make industry more competitive will be part of the Atmanirbhar Bharat Abhiyan, or self reliance campaign, they said. This latest package will follow the Pradhan Mantri Garib Kalyan Yojana and Atmanirbhar Bharat revival programmes that were announced earlier.
“The first two sets of measures were to provide cushion to industry against the Covid shock,” said one of the officials. “This set of measures would focus on rebuilding.”
Proposals being firmed up include a more digitally focussed tax administration, the enshrining of taxpayers’ rights, frontloading of defence purchases and expediting spending on key infrastructure projects that will have to be completed within a deadline, said the people cited earlier. The thrust of the proposals on manufacturing side is to enhance domestic industry’s competitiveness while making it easier and more attractive for foreign manufacturers to set up operations in the country.
Tax administration reforms will add to the draw.
Data released on Tuesday showed industrial production contracted 36% in the June quarter.
The package is based on inputs from global manufacturers on what would incentivise them to set up factories in the country. A broad framework to make the country self-reliant and boost local manufacturing is in the works, another government official said, confirming that deliberations have taken place to this end. “These are likely to be a mix of supply-side as well as some to spur demand,” he said.
The government has raised tariffs on many products and stipulated import licensing for others, which will make overseas goods expensive in the hope that this will encourage domestic production. The Pradhan Mantri Garib Kalyan Yojana was announced soon after the nationwide lockdown was implemented at the end of March and provided free foodgrain and cash payments to women, poor senior citizens and farmers.
The Rs 20-lakh-crore Atmanirbhar package in May unveiled a credit guarantee scheme for MSMEs as well as key reforms for the farm sector, among other steps. Rural demand has remained strong on the back of support from the first two packages. The next set of the measures are likely to focus on securing jobs in urban centres by providing backing for businesses.