Niti Aayog has proposed a multi-pronged strategy to revive the ailing economy. Among the several measures, the government policy think tank has suggested a reduction in the interest rate from 8 percent to 5 percent on new small savings in a phased manner spread over 24 months.

Share Market Live

NSE

If the government agrees to the proposal, implementation could begin starting October 1, 2019, people aware of the matter told CNBC-TV18.

Niti Aayog has also suggested the creation of a new special purpose vehicle (SPV) based on Specified Undertaking of the Unit Trust of India (SUUTI) to raise bonds and invest in preferred equity in non-banking finance companies (NBFCs) in a bid to support the struggling sector.

SUUTI, like the SPV, could have a net worth of about Rs 38,000 crore.

Niti Aayog has suggested a delay in merger of public sector banks (PSBs) at this stage, and recapitalization of the banks on the basis of performance soon, as announced in the annual budget this year.

On the tax front, the think tank has pushed for a rollback of dividend distribution tax and buyback tax which was levied in the 2019 Union Budget. It believes that capital gains due to a rise in market value as a consequence of the rollback will more than offset revenue losses for the government.

Proposal for the automobile sector includes allowing the BS4 buses purchased in the next six months be allowed to operate for the next 10 years — provided they comply with pollution emission norms. Niti Aayog estimates a shortage of over 80-90 percent buses in India and this move will allow for clearance of the inventory.

On the scrappage policy for the sector, the think tank has suggested giving incentive vouchers for commercial vehicle scrapping at Rs 50,000, passenger vehicles at Rs 20,000 and two- three-wheelers at Rs 5,000 in order to facilitate the purchase of new vehicles, a step, it believes, will clear pending inventory.

For the textile sector, it has proposed the removal of inverted duty structure on man-made fibers and abolition of anti-dumping duties on purified terephthalic acid and viscose staple fiber. India had imposed anti-dumping duty on purified terephthalic acid in July 2019 and viscose staple fiber in 2016.

Niti Aayog is also of the view that there should be a monitoring mechanism to implement and fast track the government's decision of 2016 when it was decided that departments and public sector undertakings (PSUs) should pay up 75 percent of the arbitral awards in contractual disputes.

Prime Minister Narendra Modi is slated to meet finance ministry and Niti Aayog officials to take stock of the economy and discuss its revival, people aware of the development have told CNBC-TV18.

First Published:Aug 22, 2019 11:57 AM IST