Finance minister Nirmala Sitharaman Friday revoked higher surcharge on the income tax outgo for Foreign Portfolio Investors (FPIs) and domestic investors, reversing the decision taken in Union Budget 2019. "Pre-Budget position is restored," she said. "The same goes for domestic institutional investments," she added.
The announcement comes as a relief as foreign investors had pulled out over Rs 9,000 crore on a net basis from capital markets in the first half of August, continuing their selling spree in the Indian market amid uncertainty over FPI tax and global trade worries. FPIs, however, invested a net Rs 2,096.38 crore in the debt securities during the period, according to depository data.
In July, FPIs had withdrawn a net sum of Rs 2,985.88 crore from the Indian capital markets (both equity and debt).
The Finance Minister flanked by ministry officials and junior finance minister Anurag Thakur briefed the media in Delhi.
Union Finance Minister Nirmala Sitharaman addressed a press conference amid concerns over the on-going economic slowdown in the country. This development came soon after Moody's Investors Service on Friday cut India's GDP growth forecast for 2019 calendar year to 6.2 per cent from the previous estimation of 6.8 per cent. For 2020 calendar year, it reduced the estimate by a similar measure to 6.7 per cent.
There are concerns around the declining GDP growth too, which is a sign of worry for the government. The GDP growth has gone down from a peak of 8.2 per cent in 2016-17 to 5.8 per cent in the fourth quarter of 2018-19. The first quarter of 2019-20 is expected to dip further to 5.6 per cent.