The government appears to be softening its stand on the higher super rich surcharge on Foreign Portfolio Investors (FPIs). A hint of this came when Finance Minister Nirmala Sitharaman said that she has sought their views.

“I am quite open to hear out what they have to say,” Sitharaman said here while briefing the media on her meeting with bankers on Monday. Further, she said that Economic Affairs Secretary Atanu Chakraborty would hold a meeting with FPIs soon.

This assurance has come at a time when FPIs have been net sellers in the Indian equity market after the Budget proposal raised the super-rich surcharge.

The higher incidence of taxation is likely to affect nearly 40 per cent of FPIs operating in India under a non-corporate structure and more specifically as trusts.

These investors took out more than ₹12,400 crore in July and have taken out more than ₹5,500 crore in August till date.

According to sources, various options are being considered to give FPIs relief, of which one is to issue a circular under existing law. Another option is to amend the Finance Bill, 2019, which has become an Act, and will take time. Finance Ministry officials said that a final decision would be taken after the meeting with FPIs.

On the proposed issuance of sovereign bonds, the Minister said nothing has been done beyond the announcement in the Budget on a part of the gross borrowings being from external markets, in foreign currencies.

In order to prepare a detailed action plan, Finance Minister Nirmala Sitharaman kicked off series of meetings. The first one was on Monday with public and private sector banks. This will be followed by meetings with the Micro, Small and Medium Enterprises (MSME) sector on August 6, the automobile sector on August 7, industry associations on August 8, financial market stakeholders on August 9, and real estate and home-buyers on August 11.

The government will factor in the takeaways from these consultations for appropriate policy responses to maintain a high growth trajectory and to address sector-specific issues.

“We are holding these back-to-back meetings with the various sectors. We want to show that we have heard them and we will respond to them….we want to assure that we are responsive government,” Sitharaman said adding that any response from the government can be seen as a “considered response”.

Core sector (comprising eight key industrial sectors such as cement, steel, electricity etc) growth is lowest in 50 months, sales growth of automobiles is in the negative lane for the last one year, corporate quarterly financial performance has been below expectation and stock market is down since the Budget.

Monday’s meeting on the banking sector focussed on overall credit growth to support the needs of the economy. Further, the ways in which banks can help some of the sectors that have been drivers of economic growth to deal with their current issues were discussed.

In particular, the credit needs of the NBFC, automobiles and MSME sectors were discussed. Transmission of benefits of rate cuts to borrowers and industry was also discussed. The Minister said that she would present the government’s views after all the meetings.

Overall credit growth from the banking system continues to be at 12 per cent, which is marginally lower than the growth of 13.3 per cent at the end of March. At the same time, with turnaround in the NPA cycle, high provision cover of over 75 per cent and record recovery, bank balance-sheets are looking healthier than before. Banks are now, therefore, in a position to step up lending, the government felt.

RBI (its Deputy Governor was present in the meeting) informed that there is no issue on the liquidity front as durable liquidity is roughly ₹90,000 crore sufficient to take care of demand but the problem is beyond that. The Minister said that these meetings will help to identify those problems.

Home buyers

She also indicated that soon there could be good news for the home buyers in the National Capital Region (NCR). She said that after the Supreme Court’s verdict (in Amrapali matter), a Group of Ministers (GoM) met with authorities such as Noida Authority and Yamuna Expressway Authority.

“We’ve had a meeting very extensive meeting so that home buyers in the NCR region are not going to be stuck without resolution. So, we hope we move forward in that and the work is on as regards giving some kind of a solution,” she said.

About two lakh houses worth ₹1.26 lakh crore are stuck due to various reasons in the NCR.

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