NEW DELHI: Industrialist Adi Godrej on Thursday said the Centre should introduce another stimulus package in the form of lower income tax rates to boost consumption in the economy. Godrej’s argument was that such a measure would help drive economic growth, even though it would mean breaching the fiscal deficit target.
“GDP growth is low. We need to do more and more to stimulate the economy and increase growth,” the Godrej Group chairman said while talking to reporters on the sidelines of India Economic Summit here.
Acknowledging that the corporate tax cut will help businesses and is a move in the right direction, the Godrej chairman said that “the government should provide more stimulus”.He added that bringing down personal tax rates will boost the slowing growth rate of the economy. “The current growth rate of economy is slow and we need to stimulate it. We need to have the growth rate up and even if it means that the fiscal deficit goes up, I do not think it matters. It must do,” he said.
India grew by just 5 per cent in the first quarter of 2019-20 and several sectors including automobile have reported sharp contractions in demand. On September 20, Union Finance Minister Nirmala Sitharaman announced a reduction in the base corporate tax rate to 22 per cent from 30 per cent as part of a series of stimulus measures to revive the slowing growth.
However, the tax giveaway and lower GST collections, which have dropped sharply to a 19-month low of Rs 91,916 crore in September, are expected to make it difficult for the government to cut taxes elsewhere.
Meanwhile, NITI Aayog CEO Amitabh Kant indicated that there will be many more structural reforms by the government in the coming days to push economy to a high growth trajectory.
“I think many more structural reforms are in the offing. The government has pushed for public sector disinvestment. I can tell you we have pushed for asset monetisation in a very big way. Our belief is that instead of green-field projects, investors must come into brown-field projects,” Kant said.
Kant added that the government has already announced a series of economic boosters including capitalisation of public sector banks, merging some of them, export packages and corporate tax rate reduction.