India’s corporate community had been somewhat skeptical of newly-appointed Finance Minister Nirmala Sitharaman since the beginning of Modi government’s second term, but today they’re singing a different tune.
Finance Minister Nirmala Sitharaman has been hailed by India’s corporate honchos after she announced a broad-ranging set of reforms today morning. Chief among them had been the reduction of the effective corporate tax rate from 30% to 25%, which put India at par with more developed Indian peers, such as Singapore. The government also announced that there would be no tax on buy-backs that were announced by listed companies before 5th July. The stock markets took notice, and rose nearly 5 percent, which is the highest single-day rise in years.
Several business leaders took to Twitter to make their appreciation known for the historic move. Uday Kotak, the CEO of Kotak Mahindra Bank, called it a “big bang” move. “It signals that our government is committed to economic growth and supports legitimate tax abiding companies.A bold, progressive step forward,” he said.
Reducing corporate tax rate to 25% is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies.A bold, progressive step forward.
— Uday Kotak (@udaykotak) September 20, 2019
Biocoin founder Kiran Mazumdar Shaw, who’s often a vocal critic of the Modi government, said it was a great move. “My hats off to Finance Minister Nirmala Sitharaman for this bold but most needed move,” she said, adding that it would spur growth.
Corporate Tax Rate Cut From 30% To 25.2% To Spur Growth- this is a great move which will firmly revive growth n investment. My hats off to FM @nsitharaman for this bold but most needed move. https://t.co/yhvJ9IcMmm
— Kiran Mazumdar Shaw (@kiranshaw) September 20, 2019
“Thank you Prime Minister Modi and Finance Minister Nirmala Sitharama for listening to stakeholders and unleashing the Animal Spirits. This restart marks the beginning of the Great Indian Dream!” said investor Porinju Veliyath.
All set to Make in India! Thank you @PMOIndia and @nsitharaman for listening to stakeholders and unleashing the Animal Spirits. This restart marks the beginning of the Great Indian Dream!
PS: Dil mange more on Land, Labour, Logistics, Personal Income Tax (42.7% too much) et al.
— Porinju Veliyath (@porinju) September 20, 2019
Financial markets journalists were just as impressed. Darshan Mehta, who works for Bloomberg Quint, said that the financial community would be telling their kids about the event years from now, about how their country had changed.
All of us who saw what happened today in markets will be telling this to their kids years from now….how India changed @sensexbaba
— Darshan Mehta (@darshanvmehta1) September 20, 2019
Anuj Singhal from CNBC TV 18 marveled at how the announcement had been kept absolutely under wraps, and no one in the financial community had an inkling that it was coming.
And what a well guarded secret. Absolutely NOBODY had a clue about what was coming. This is what's needed. 0 leak! https://t.co/xVVEdbRMeO
— Anuj Singhal अनुज सिंघल (@_anujsinghal) September 20, 2019
Within the startup community, the reactions were just as effusive. Snapdeal founder Kunal Bahl said it was an “incredible” announcement which would deliver a great boost to the Indian economy.
Incredible announcement which should deliver a great boost to the Indian economy. I am confident that the startup sector will also benefit tremendously with increased spending and investments that this will precipitate. @narendramodi @nsitharaman ?? https://t.co/b5E8j5HHuh
— Kunal Bahl (@1kunalbahl) September 20, 2019
Investor Vani Kola said it was a laudable move, that would restore confidence to rejuvenate investment and growth.
— Vani Kola (@VaniKola) September 20, 2019
Instamojo founder Sampad Swain joked that the announcement was the real budget.
Today was the real budget. July 5th announcements wasn't. Now remaining is removal of LTCG tax.
— Sampad Swain (@sampad) September 20, 2019
And fund manager Samir Arora went a step further, saying the announcement was more significant than the last twenty budgets put together.
This is not bigger than budget, this is bigger than last 20 budgets.???
— Samir Arora (@Iamsamirarora) September 20, 2019
It’s too early to say how the reduction in corporate tax will actually impact India’s economy, but for now it’s created a euphoria that hasn’t been seen in recent memory.