New Delhi: The Congress on Friday said the government's "constant roll-backs" may give an "impression of progress through stock market bumps" but these will lead to worsening of the economic situation and are unlikely to revive investments.
Questioning the timing of the corporate tax cut announcement, the opposition party alleged that it has been dictated by Prime Minister Narendra Modi's 'HowdyModi' event in the United States.
Terming 'HowdyModi' the "world's most expensive event ever", Congress leader Rahul Gandhi said he is "amazed" at what Prime Minister Modi is ready to do for a stock market bump ahead of the event in Houston.
"Amazing what PM is ready to do for a stock market bump during his Howdy Indian Economy jamboree. At + 1.4 Lakh Crore Rs. the Houston event is the world's most expensive event, ever! But, no event can hide the reality of the economic mess 'HowdyModi' has driven India into (sic)," Gandhi said on Twitter.
The Congress party said in its official Twitter handle, "The constant roll-backs and erratic decisions taken by this government may give the impression of progress through stock market bumps but will further decrease investor confidence and lead to worsening of the economic situation in the country."
The government on Friday slashed the income tax rates for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.
Congress leader Jairam Ramesh welcomed the reduction in corporate tax rates but expressed doubts on whether the step will revive investment. Asking whether it was the prime minister's "trump card", he said the government's move does nothing to dispel the fear that pervades India Inc.
"A headline-itis afflicted, panic-stricken Modi Sarkar has cut corporate tax rates less than 3 months after a Budget and 4 months before the next one. This is welcome but it is doubtful whether investment will revive. This does nothing to dispel fear that pervades in India Inc," Ramesh said on Twitter.
"Timing of FM announcement dictated by #HowdyModi event. PM can now say, 'I have come to Texas promising lower Taxes'. Is this his 'trump card'?," the Congress leader asked.
Another Congress leader, Abhishek Singhvi, said drastic reduction in corporate tax rate is good but the arbitrage between highest effective individual tax rate of 42 per cent and higher effective corporate rate of 25 per cent begins to look absurd.
"Good: GOI, FM reduce corporate tax rate drastically. But arbitrage between highest individual tax rate (42% effective) and highest effective corporate rate of 25% begins to look even more absurd. If animal instincts are required for growth, I predict 35% Individual rate yields more than 42% (sic)!" he tweeted.
Announcing the latest set of measures to jump-start flagging growth, Finance Minister Nirmala Sitharaman said the reduction in tax rates has been done by promulgating an ordinance to an amendment to the Income Tax Act.
Battling a six-year low economic growth and a 45-year high unemployment rate, Sitharaman announced the step two-and-half-months after presenting her maiden Budget, that was hailed as "development-friendly" and "future-oriented". The fiscal measure announced by her will cost the government Rs 1.45 lakh crore in revenue annually.
In the fourth phase of post-budget economic stimulus measures, Sitharaman cut base corporate tax for existing companies to 22 per cent from current 30 per cent and for new manufacturing firms, incorporated after October 1, 2019 and starting operations before March 31, 2023, to 15 per cent from current 25 per cent.
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