FM asks private sector to unleash 'animal spirits' & increase investments

New Delhi: Finance Minister Nirmala Sitharaman on Saturday exhorted the private sector to take advantage of corporate tax rate cut and other initiatives of the government, and unleash 'animal spirits' by enhancing investments to make India one of the fastest growing economies of the world.

The government has been waiting for the expansion by the private sector, she said while reminding India Inc of various measures including corporate tax rate cut, policy consistency, ease of doing business, among others to facilitate investment.

We need capacities to be ramped up, we need expansion, we need more production of many such items which are required for the economy. I would invite business leaders...post the corporate tax rate reduction I've been waiting to see expansion happening," she said.

In the biggest reduction in 28 years, the government in September 2019 slashed corporate tax rates by up to 10 percentage points to attract private investment and reinvigorate the sagging economy. The tax break resulted in financial implication of Rs 1.45 lakh crore on the exchequer.

Base corporate tax rate for existing companies was reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.

"So I would like to see now that the policy is clear, tax rates have been brought down, policy consistency has been underlined and ease of doing business is still going further. I would now like to see private investors and private industry...coming forward with the so called 'animal spirits' to show that it is possible to pull India up and keep it high as one of the fastest growing economies. It is now on your shoulder entirely," she said.

Addressing industry leaders at an All India Management Association (AIMA) virtual event, the Finance Minister said the recent Budget has addressed several issues which were so critical for India to have a clearer path for the next decade or more. The Budget 2021-22 comes against the backdrop of the pandemic and contraction of the economy to give a sense of certainty to businesses that policies will remain predictable and therefore businesses can continue to concentrate on their core activities, she said.