In a bold economic measure, Finance Minister Nirmala Sitharaman on Friday announced a reduction in corporate tax rate for domestic manufacturing companies from 30 per cent to 22 pc. This was aimed at giving a boost to Make In India initiatives. For new manufacturing companies, the corporate tax has been reduced from 25 per cent to 15 pc.

The fiscal changes will be brought through ordinance. The measure was timely because the GDP growth rate had slipped to 5 per cent this time, a six-year low.

This was the third time in last three weeks that Finance Minister Nirmala Sitharaman has made announcements to give a boost to business and economy. The announcement was in a sense historic.

The Bombay Stock Exchange sensex recorded its highest jump of nearly 2,000 points recorded in the last ten years, and India Inc leaders have welcomed the step as “a big bang reform”.

Naturally, the financial outgo for the Central exchequer would be to the tune of Rs 1.45 lakh crore as it may widen fiscal deficit, but it will definitely improve overall sentiment in business and economy. During the last several months, no fresh investments in business projects were being made and there was a steep fall in investment by foreign institutional investors. Sitharaman’s bold step will address these concerns squarely.

One more area that is left is the imposition of steep surcharge on super rich income tax payers in the last Budget. There should be a rethink about it and it should be revised.

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