Economists and sectoral experts have asked the government to fix agricultural issues, generate jobs, and focus on fiscal consolidation. At a pre-Budget meeting with Prime Minister Narendra Modi, his Cabinet colleagues, economists suggested that the fiscal consolidation road map be adhered to, even as corporation tax be reduced from the current rate of 30 per cent.
Economists also favoured the reimposition of the long-term capital gains (LTCG) tax on listed securities and mutual funds, and the extension of the holding period of short-term capital gains (STCG) tax to three years from a year. They also wanted the Budget to have a fresh strategy on disinvestment, sources said.
A clear suggestion was to create jobs in rural areas, develop clusters at the district level for specific agriculture products, change the crop geometry and improve linkage of farmers with markets.
SUGGESTIONS TO THE GOVERNMENT
Big focus on agriculture, with aim to boost incomes and not just productivity, health care, and education
All attention should be on creating jobs, with emphasis on overhauling apprenticeship programme
Reintroduce long-term capital gains tax and cut corporation tax
Strict adherence to fiscal consolidation road map
“We made a suggestion that there is no reason why there should be a distortion in the choice between long-term capital gains on debt-based assets and equity-based assets,” said M Govinda Rao, economist and former member of the Economic Advisory Council to Prime Minister. On suggestions regarding agriculture, he said, “We need to have more investment in agriculture, processing, marketing, logistics, and the like.”
He also said a suggestion was made to rationalise fertiliser subsides to stay on the path of fiscal consolidation. “The government should aim to reduce subsidies and transfers, and aim to increase capital expenditure. For which, we need significant increase in items such as disinvestment,” Rao said.
Source: Business Standard