Government attempts to stimulate the economy again

In an aim to revive the Indian economy, finance minister on Saturday announced slew of measures that will act as a boost for sectors like real estate, export etc. India’s exports during August fall nearly 6.1 per cent to US$ 26.13 billion. India’s GDP growth during April-June period fell to 5 per cent from 5.8 per cent in preceding quarter.

For the export promotion, the government has extended the scheme of reimbursement of taxes and duties. The government will replace the existing merchandise exports from India scheme (MEIS) with remission of duties for export products (RODTEP). At present, sectors enjoy incentives up to 2 per cent over MEIS; this will transit into RODTEP from January 1, 2020.

The government, after discussion with the Reserve Bank of India (RBI) has revised priority sector lending (PSL) norms for export credit which would release additional funding of around Rs. 36,000 crore to Rs. 68,000 crore. Along with these measures, the government also announced higher insurance cover for banks to lend working capital for exports.

In addition to measures for export sector, the government has also shown its willingness to boost the real estate sector, where it released a package of Rs. 20,000 crore for last mile affordable housing projects which is likely to benefit 3.5 lack home owners. Non-NPA, non-NCLT projects will be entitled for this funding. These measures are expected to help the realty firms who have stalled projects due to liquidity issue. Of this Rs. 20,000 crore, the government will contribute 50 per cent and rest will be funded through investors like LIC, sovereign wealth, private capital, development finance etc.

Following these developments, stocks like Arvind, Welspun India, Himatsingka Seide which generate majority of their revenues from exports, surged in the range of 3-6 per cent in Monday’s trading session. Also, most of the realty stocks were trading in the positive terrain.