Remonetisation and easing taxation is crucial, says ASSOCHAM

ASSOCHAM President Sunil Kanoria lauded the Economic Survey that was presented on Tuesday, hailing it to be a correct analysis of the impact of demonetisation on society.

"One must compliment the Chief Economic Adviser for coming out with an honest assessment and suggesting that the credibility of the system would be strengthened if tax arbitrariness and harassment are ended," said Kanoria.

According to Kanoria, the Economic Survey rightly highlighted that the agriculture and informal sectors of the economy were impacted more by the note ban. He also added that remonetisation must be done expeditiously.

The impact of demonetisation is visible on the GDP in the current fiscal, as has also been conceded by the Economic Survey in the range of ¼ and ½ percentage point.

On the GDP growth projections both for the current fiscal and 2017-18, Kanoria said that the range given by the Economic Survey is wide enough and the global headwinds from the new US administration and the firming of oil prices have to be watched carefully.

"The Survey has rightly picked up the potential risks to the global economy and its impact on India in the form of higher oil prices, trade tensions from sharp currency movements and geo-political factors. An upsurge in protectionism that could affect India's exports, is surely a matter of concern," Kanoria added.

On the positive side, Kanoria believes the impending Goods and Services Tax would be a game-changer in the medium to long term, though we may see some teething troubles.

On the issue of Universal Basic Income (UBI), the ASSOCHAM feels it should not be another add-on; but if it can replace all and sundry subsidies and consolidate them into a single programme which is easy to implement with minimum of pilferage, then it could be considered.

"Some amount of flexibility is desirable to boost consumption demand by way of cut in corporate tax and raising the personal income tax rate. However, overall

direction of fiscal consolidation should not be compromised," added Kanoria, on fiscal deficit in India.