Prime Minister Narendra Modi on Friday hailed the measures to cut corporate tax as “historic” and listed out how the measures would help the Indian economy, including providing “a great stimulus to Make in India”.

The prime minister’s remarks came after Finance Minister Nirmala Sitharaman announced reductions in corporate tax rates for domestic companies and new manufacturing firms in a fresh bid to boost economic growth earlier in the day.

“It will give a great stimulus to Make In India, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians,” Modi said. He added that the steps announced in the last few weeks proved that the government was “leaving no stone unturned” to make the country a lucrative place for business, increase opportunities for all sections of society and therefore work towards the $5-trillion economy goal.

Sitharaman had announced that Indian companies will have an option to pay income tax at a rate of 22% if they do not avail of any other incentive or exemptions. New domestic manufacturing companies can pay 15% corporate tax with the same condition, if they are incorporated on or after October 1, 2019, and start production no later than March 31, 2023.

The Centre will also give up revenue of Rs 1.45 lakh crore per year, the finance minister said. The move was lauded by Union minister Piyush Goyal and Reserve Bank of India Governor Shaktikanta Das, who said it was a bold step and highly positive for the economy.

Within minutes of the announcement, the benchmark share indices surged more than 4%, with the BSE Sensex rising over 1,650 points at one stage. The previous big announcements in recent weeks were an attempt to boost private sector investment and bring increased stability into the banking system through several public sector bank mergers. Another, on September 14, included a Rs 50,000-crore export incentive scheme and a Rs 10,000-crore special window to provide last mile funding for unfinished housing projects.

The country’s economic growth rate had dipped to 5% in the April-June quarter, the lowest in over six years. Core sectors, including automobiles and manufacturing, witnessed a progressive slowdown in growth in the last few months due to weakened consumer demand and dearth of investments.

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