Six actionable Ideas to make the Indian economy grow at 9% per annum

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  1. Reduce the GST slabs and the tax rates under GST: At present we have four slabs of 5%, 12%, 18%, and 28%. Reducing these four slabs to just two, i.e., 5% and 12% will give a big boost to consumption and increase the spending limit of the consumers.

 

  1. Bring petrol and diesel under GST: The common man is feeling the pinch due to steadily increasing petrol and diesel prices. The Government made a windfall from 2014-17 due to lower crude oil prices in the international market but did not pass on the benefits to the consumers.  Once included in GST, diesel and petrol will cost the same across the country.

 

  1. Reduce income tax and corporate tax: At present, the income tax is 30% in addition to a surcharge of 15% for those earning above Rupees 10 lacs per annum. This is amounting to tax terrorism.  We can take Russia as an example to solve this complex problem.  Russia is ranked at the 38th place in ease of doing business report published by the World Bank in 2018.  Russian Government imposes a flat income tax at the rate of 13% for all residents.  It can be argued that 13% will not be suitable for India where the Government has to bear a huge expenditure in solving various problems like poverty, malnourishment, female feticides, subsidies, housing, and child education, etc.  However, a flat tax of 20% on income of citizens and companies will go a very long way to overhauling the menace of tax terrorism which we are facing in our country.  It will also spark the interest of international companies to open up their headquarters in India and will lead to more investment thus rejuvenating the economic cycle.

 

  1. Bring agricultural income under income tax: Only 1.7% of India’s population pays income tax according to the data released by the Income Tax Department in 2018. So there is a significant potential in bringing many citizens into the mainstream.  While it is true that distressed farmers in our country are committing suicides and are being exploited by middlemen but this only applies to land laborers or those owning less than certain hectares of land.  The wealthy farmers cannot be excluded from the mainstream.  The latest National Sample Survey Report revealed that Rupees twenty-five thousand crores as income tax could have been collected by taxing top 4.1% of agriculture households.

 

  1. Direct Cash Transfer Scheme: The Government has done a good job at opening several million bank accounts of the poor under Jan Dhan Yojana Scheme and linking it to Aadhar Card.  The below poverty line report states that anyone earning Rupees 33 or more per day is above the poverty line.  It would be a good step to provide direct cash to those poor people who are unable to reach this threshold.

 

  1. Entrepreneurship: India has ranked a meager 103/190 countries in reducing insolvency.  It takes an astonishing 4.3 years to resolve insolvency in India.  In property registration procedures, India stands 154/190 countries.  Land reform measures are the need of the hour.  India ranks 146/190 countries on the “trading across borders” measure.  If the government promises to amend these three areas which are hampering India’s chances to vie for a spot in the top 50, India could achieve this ranking before 2022, India’s 75th year of independence.

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