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How babus worked to craft tax cut plan Decision To Spur Economy Fixed In 2 Day

September 22, 2019 06:31 AM


How babus worked to craft tax cut plan

Decision To Spur Economy Fixed In 2 Days
Rajeev Deshpande & Sidhartha TNN

New Delhi:

The decision to go ahead with path-breaking cuts in corporate tax rates was finalised on Wednesday afternoon and officials given the go-ahead to complete legal and constitutional requirements prior to finance minister Nirmala Sitharaman’s press conference in Goa on Friday.

The officials prepared the paper work for the exception from Cabinet approval that was later signed by PM Narendra Modi and also worked on fine-tuning and re-examining all fiscal implications of the tax cuts. The preparation of the ordinance to amend the Income Tax Act then got under way.

As they worked in secrecy, officials were able to get the ordinance ready only in the pre-dawn hours of Friday when all procedures in the finance ministry were completed. The ordinance was then sent to the PMO and as the morning advanced, to Rashtrapati Bhavan for President Ramnath Kovind’s assent.

In the meanwhile, finance ministry officials and Sitharaman reached Goa where GST Council was to meet. The press conference scheduled ahead of the meeting at 10 am attracted attention but the purpose was unclear beyond expectation of another round of measures to boost the economy.

The press release to accompany the announcement had been readied but was available only to a handful of officials. It was made available to the media once the finance minister completed speaking about the main points of the decisions that had been taken over the past few days.

The presidential approval was received ahead of Sitharaman’s press conference. Earlier, the discussion in government had centred around if it is time for a bigbang announcement intended to overhaul the official thinking on the economy rather than more fixes and immediate measures.

The scope of tax concessions, it was felt, should not be seen in the short term but as initiatives to accelerate the economy and also change its character. The strong majority in Parliament and a conviction that current slowdown could be used as a launch pad for deeper reforms motivated the government.

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