A day after government announced an 'early Diwali' for India Inc, NITI Aayog CEO Amitabh Kant urged industries and companies to announce massive discounts in order to boost demand. In response to the suggestion, Maruti Suzuki India chairman RC Bhargava said that customers will have to "wait a couple of days and you will have the answer".
Both Kant and Bhargava, along with several business tycoons, were at India Today Conclave Mumbai 2019 to take part in a panel discussion over measures to remedy the slowdown in Indian economy. Their comments came in the backdrop of corporate tax cuts announced by the Centre on Friday.
Finance Minister Nirmala Sitharaman had announced that the corporate tax rate, including all surcharges and cess, for domestic companies will be 25.17 per cent. The same for new manufacturing firms would be 17 per cent, instead of 25 per cent.
On Saturday, Kant said that the government has placed a lot of liquidity at the bottom line of companies and brought India's tax regime at par with the East Asian countries. Now the private sector needs to do its part to utilise opportunity to revive demand and the economy.
"What the companies need to do now is to give massive discounts, deal with their dealers, come out with huge number of concessions, and create the animal spirit among consumers. The onus is now on the private sector. The government has done its bit," Kant said.
In response, Bhargava said, "Maruti's prices, de facto, have already been cut in the market through discounts. Whether a formal cut will happen or not, I cannot possibly announce here. But please wait a couple of days and you will have the answer with you."
Pawan Goenka, Managing Director of Mahindra and Mahindra, said during the panel discussion, "If you look at the discounts that are available today, they are among the highest that I have seen in a long, long time. If I do a rough calculation, we probably, for the same PBIT (profit before interest and tax), have about 5 per cent more PAT (profit after tax). Even if we were to pass it entirely to discount, then we can reduce (prices by) 5 per cent."
"Is that going to be enough to bring the animal spirits back, I am not so sure," Goenka further added.