India is rolling back recent tax hikes on foreign and domestic equity investors and is accelerating a capital infusion of $10 billion into state-run banks, the finance minister said late on Friday, in an attempt to boost market sentiment and revive the slowing economy. The government also outlined a raft of measures including some for the crisis-hit autos sector, small businesses, and the troubled shadow banking sector to calm nerves of investors and lift consumer sentiment ahead of the Indian festive season that begins next month. “These measures are aimed at boosting growth, we are open to suggestions, we want to speed up growth,” said Finance Minister Nirmala Sitharaman, at a news briefing outlining the measures. The moves come after several business leaders and industries urged the government to take swift measures to boost demand and investments after economic growth slipped to near five-year lows in the January-March quarter. Most analysts expect data due this month to show that growth in April-June faltered even further. Indian markets have sunk more than 10% since Sitharaman had outlined a higher surcharge on income of the super-rich including some foreign portfolio investors (FPIs), who have sold large positions since the surcharge was announced in the budget in early July. On Friday, Sitharaman said she would exempt the investors, drop plans for a surcharge on long and short-term capital gains, and also provide additional 200 billion rupees ($2.8 billion) of liquidity to housing finance companies to help revive the real estate sector. “Overall, the take home is that the government is listening, has listened, has identified solutions and have taken some quick and bold wide ranging decisions,” said Ashishkumar Chauhan, head of Indian stock exchange operator BSE, in a statement. “It should give confidence to everyone in business that this government is intent on solving all issues by discussions.” The new measures including the withdrawal of the hiked taxes on foreign investors would result in revenue losses of about 14 billion rupees ($195 million), having only a limited impact on government revenue, the finance ministry said. Sitharaman said she was confident of meeting the fiscal deficit target of 3.3% of GDP considering the trend in revenue collections.
