NEW DELHI -- India's government on Friday rolled back a surcharge on foreign portfolio investment and announced steps to lower interest rates on home and auto loans to boost the country's faltering economy.
Finance Minister Nirmala Sitharaman told reporters that the government will also withdraw a tax on investments by startups to help raise private investment and create jobs.
The surcharge on foreign portfolio investment was announced in India's budget in July after the Hindu nationalist-led government won a massive victory for a second term. It applied to individuals earning more than 20 million rupees ($280,000) annually and led to a sharp fall in Indian equity markets.
Economic growth slowed to a five-year low of 5.8% in January-March with consumer spending and corporate investment faltering. Declining industrial output and automobile sales also raised fears of a deeper slowdown.
Sitharaman's announcement came a day after Rajiv Kumar, chairman of the government-run Policy Commission, called for immediate steps by the government to tackle a bad liquidity situation and weak private investment.
"This is an unprecedented situation for the government. For the last 70 years we have not faced this kind of a situation," The Indian Express newspaper quoted him as saying at a business meeting in New Delhi.
According to the World Economic Forum, India is poised to become the world's third-largest consumer market, growing from $1.5 trillion this year to $6 trillion by 2030.
Earlier this month, India's central bank cut its key interest rate to 5.40%, but businesses complained that many commercial banks have not been passing on the cuts to borrowers. On Friday, the finance minister said banks have been asked to transfer the benefits to borrowers.
In a bimonthly review of the economy in August, the bank trimmed the GDP growth forecast for the current fiscal year to 6.9% from 7%. India's fiscal year runs from April to March.