Old troubles mar new term: A status check of Modi govt's 100 days

Amid the economic slowdown, controlling the inflation rate is the only thing that the Modi government can boast about in its first 100 days in office. But, low inflation was also because of a lack of demand, responsible for a slack in the economy. It, though, provided a room to the RBI to go for a cut in the repo rate for the fourth consecutive time in August — this time by an unconventional 35 basis points. 

On its part, the government took measures to perk up the economy. Most keenly watched of these was the withdrawal of the super-rich surcharge on portfolio investors, which had spooked the markets. However, the first quarter GDP data showed the economy losing steam. 

Measures taken by the government to perk up the economy

• Rolls back controversial Budget proposal of super-rich surcharge on foreign and domestic portfolio investors on capital gains in the equity markets 
• Withdrawal of angel tax from start-ups permitted by the DPIIT 
• Announcement of upfront capital infusion to the tune of Rs 70,000 crore into banks
• Additional liquidity infusion to the tune of Rs 20,000 crore into housing finance companies (HFCs) 
• Partial credit schemes for purchase of pooled assets of NBFCs and HFCs 
• Clarifies that BSIV vehicles purchased till March 31, 2020, will remain valid till entire registration
• Lifts ban on purchase of new vehicles for replacement of old vehicles by govt departments 
• Announced additional 15 per cent depreciation rate on all vehicles acquired till March 2020
• Finance minister Nirmala Sitharaman promises to take up the proposal of a cut in GST rate on vehicles at the GST Council meeting scheduled on September 20
• Also promises refunds within 30 days to the MSME sector, modalities being worked out

Developments in the financial sector

• Merger of 10 public sector banks (PSBs) into 4
• PSBs recapitalised with Rs 70,000 crore 
• Partial credit guarantee scheme for PSBs to buy assets of NBFCs
• Regulation of HFCs was given to the Reserve Bank of India (RBI) 
• Additional Rs 20,000 cr support to HFCs from National Housing Bank
• Co-origination of loans by banks with  NBFCs to cater to the MSME sector
• RBI came up with circular on June 7, which gave greater flexibility to banks to resolve stressed assets 
• Monetary Policy Committee cut benchmark policy rate by 60 basis points
• RBI transferred Rs 1.76 trillion to Centre with Rs 1.23 trillion as dividends and Rs 52,637 crore from excess reserves
• The RBI mandates linking all floating interest rates to an external benchmark