How Can Government Boost the Indian Economy?
Speaking at Saudi Arabia’s annual investment forum, India’s billionaire Mukesh Ambani said that there is a slight slowdown in Indian economy. However, he told that this slowdown was temporary, and the measures taken by the government will help in boosting the economy in coming months.
Recently, International Monetary Fund has lowered its India’s GDP growth in 2019 to 6.1% from its earlier projection of 7.3%. Lowering of India’s GDP growth was enough to prove that there is a slowdown in economy. Government may be trying hard in convincing that there is nothing wrong in Indian economy, but the growth of first two quarters falling to 5.8% and 5% respectively was evident of economic slowdown in country. Added to it most of the sectors have reported the substantial slowdowns.
What Can be done to boost the Economy?
- States should slash stamp duty and registration fee on immovable property deals to 0.5% levels for registries done from 24.10.2019 to 24.12.2019. This will set real estate on fire, eliminate black money hoarding.
- Enable banks to auction seized properties of defaulters and clean their books. Government can realise lot of stamp duty revenue and even demand for renovation and construction as well as home loans will go up.
- States should scrap profession tax. Now that they have GST which empowers them to tax services, they should let go of profession tax which creates hassle for employers with lot of unproductive work.
- Centre should cut interest rates on postal savings except the interest rates under PPF and Sukanya Samridhi Yojana.
- At any rate tax incentives in postal scheme except PPF and Sukanya Samridhi Yojana be withdrawn and a new section 80CA be inserted to incentivize investment in bank deposits. This will help banks expand credit creation and help transmit rate cuts.
- RBI needs to stop scaremongering about inflation and cut rates deeply by least 50 to 75bps.
- Rationalise TDS on residents and make it less TDS. No TDS on cashless payments and 30% TDS on cash payments to reduce workload and to promote digital transactions. This will help reduce the money circulations.
- Provide cash back of 50% of GST paid on cashless purchases between 23rd October 2019 to 1st December 2019. This will provide incentives to use cashless means, boost demands and boost collections. The central government should bear this expenditure.
- Cut Dividend Distribution Tax to 5%. Reduce buyback tax to 5%. Repeal section 115BBDA which taxes dividend above 10 lakhs again in shareholders’ hand.
- Bring back LTCG exemption on listed shares. Increase long term period from 12 months to 18 months.
- Tweak section 115BBE as regards to voluntary disclosure of evaded income in ITRs. This will help government raise huge revenue for its 100 lakhs crore investment.
- Individual personal tax relief should be considered by the government.
In past few months, Government of India has taken few steps in order to boost India economy, be it cutting down of corporate tax or slashing of policy repo rate by 25 basis points by RBI. However, this may not be enough to boost the economy following the Global slowdown. Finance Minister Nirmala Sitharaman said that there will be next wave of reforms soon in order to boost the Indian economy.