Godrej group Chairperson Adi Godrej on Thursday called for a cut in personal taxes to boost the economy, and urged the government to act fast to speed up growth, reported PTI. “The government should provide more stimulus,” Godrej said on the sidelines of India Economic Summit in New Delhi.
Godrej’s comments come at a time when India’s economy is faltering. Economic growth rate slipped to 5% in the April-June quarter, the lowest in over six years. In the last few months, core sectors such as automobiles and manufacturing have witnessed a progressive slowdown because of weakened consumer demand and dearth of investments.
Godrej said the second quarter that ended on September 30 would also follow the same trend. “The current growth rate of economy is slow and we need to stimulate it,” he added. “We need to have the growth rate up, even if that means the fiscal deficit goes up. I do not think it [the rise in fiscal deficit] matters. It must act.”
Fiscal deficit is the difference between a government’s borrowings and revenues. The Centre has stuck to its objective of containing fiscal deficit at 3.3% of the Gross Domestic Product in the 2019-’20 financial year. On September 22, Union Finance Minister Nirmala Sitharaman said the government did not have plans to revise the fiscal deficit target.
Godrej, however, praised the government’s move to reduce corporate tax to 22%, but added that it was not enough. “I think personal income tax rates need to be cut,” the industrialist added. “And certain industries need to be provided a fillip.”
On September 20, Sitharaman had announced reductions in corporate tax rates for domestic companies and new manufacturing firms in a fresh attempt to promote growth. The move will cost the government an estimated Rs 1.45 lakh crore annually.
Godrej said he expects the Reserve Bank of India to cut the policy rate by 25 basis points to 5.15%, reported The Telegraph. The top bank is scheduled to hold its monetary policy meet on Friday where it will announce the rate. “But the banks need to pass that on the benefit of the rate cuts faster,” he added.
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