Relief on way for auto, other sectors impacting economy

After a tough posturing that eroded investor confidence and wiped off lakhs of crores of rupees from the market, the Centre is likely to give relief to the sectors impacting economic growth, including automobile.

Finance Minister Nirmala Sitharaman has agreed to meet the stakeholders of financial sector this week and hear out “whatever they have to say”. This comes days after her stiff stance when she asked what would happen to domestic investors if she yielded to foreign investors.

Separately, the banks have been asked to fast-track loan disbursement and look for ways in which they can help the slowing economy.

The minister has also lined up meetings with the representatives of automobile sector, real estate and other industry bodies this week.

Her meeting with stakeholders starts from Tuesday amid expectations that the government would announce specific measures to kick-start demand for automobiles and other white goods well ahead of the festive season of Dussehra and Deepavali.

While the automobile sector is demanding GST rate rationalisation to stimulate demand, the newsprint industry wants a cut in customs duty by half.

Passenger vehicles’ sales have slumped 31% while two-wheeler sales have fallen 16% in July. Increased prices, hike in insurance premium and increase in fuel prices have hit demand in the sector.

“The government will factor in the takeaways from these consultations for appropriate policy responses to maintain a high growth trajectory and to address sector-specific issues,” government sources said.

Early on Monday, Sitharaman met the bank heads. The meeting focussed on overall loan growth to support the needs of the economy. She discussed with lenders the ways in which they can help some of the sectors that have been drivers of economic growth, such as NBFCs, automobiles and MSME sectors.

The transmission of benefits of rate cuts to borrowers and industry was also discussed. Digitalisation efforts were reviewed with a view to stepping up efforts in this direction.

Banks also articulated some issues they have been facing in service tax.

The overall credit growth from the banking system is at 12%, which is marginally lower than the growth of 13.3% at the end of March. But with the turnaround in the NPA cycle and recovery in their balancesheet, they are in a position to step up lending, sources said.