PM focuses on tourism, skills to boost jobs

Economists bat for cut in income tax rates and people-friendly Budget

Prime Minister Narendra Modi on Tuesday laid emphasis on innovation in the tourism sector and skill development to boost employment generation.

The dominant view at a day-long brainstorming session for top policy makers and economists at the National Institution for Transforming India (NITI) Aayog was the Budget for 2017-18 should be friendly to citizens and taxpayers. 

Modi said Indians, in general, don’t want to evade taxes but they want proper utilisation of their hard-earned money given to the government as taxes. 

He said people talk of demographic dividends but he wanted to understand from economists as to how could that be reaped when automation was happening.

“We need skills, scale and scope to realise our demographic dividend,” Modi said.

He said tourism, both international and domestic, needed to be focused on creating jobs. Besides, skills would have to be developed to make people employable, he added.

Defending the government’s decision to bring the Budget presentation ahead by almost a month, Modi said authorisation of expenditure came with the onset of the monsoon in the existing Budget calendar. This, he said, resulted in government programmes being relatively inactive in the productive pre-monsoon months.

Advancing the Budget presentation by a month would allow expenditure to be authorised by the time the new financial year began. Budget is likely to be tabled in Parliament on February one against the usual practice of February 28.

Later, briefing reporters about the meeting, NITI Aayog Vice-chairman Arvind Panagariya said the Prime Minister also underlined the need for greater cooperation among different wings of the government.

Modi said the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) should not work in silos but share data.

“If someone sees that his or her tax revenue is used to build, say a hospital, nobody will hesitate to pay tax, but when expenditure is not properly done, then people want to evade,” Panagariya said, summarising Modi's intervention.

Asked whether the issue of demonetisation figured in the meeting, Panagariya said it was mentioned only as part of formalisation of economy.

The prime minister also sought views on agriculture, taxation, tariff-related matters, education, digital technology, housing, banking, governance reforms, data-driven policy and future steps for growth.

Finance Minister Arun Jaitley said the government was open to out-of-the-box suggestions on the Budget.

Some economists suggested a flat rate of income tax and said the Budget should focus on the organised sector, which had been hit by demonetisation. They advised the government that the Budget should emphasise on capital gains tax but not on listed securities.

Economists also favoured cut in income tax rate and harmonisation custom rate.

“Tax simplification figured quite a lot... on the direct taxation, both corporate and personal income tax on simplifying, reducing exemptions, bringing down tax rate and aligning tax system to make India competitive with international destination,” Panagariya said.

Jaitley had already announced in the Budget for 2015-15 a roadmap to cut the corporation tax rate to 25% from the existing 30% in four years till 2018-19. However, it was not cut in the Budget for 2016-17.

The finance minister recently hinted at lower level of taxation. “What you need is a broad base of the economy, for which you need a lower level of taxation,” he had said.

Besides, a suggestion was made for listing of PSUs and increase use of Direct Benefit Transfer (DBT) to subsidy expenditure.

Farm sector experts suggested incentivising states to undertake market reforms, create corpus fund for promoting farm mechanisation and micro-irrigation, and provide interest subvention for term loans so that income of farmers are doubled by 2022.

Experts also suggested that there is a need to invest in the tourism sector which has potential to generate high paying job and making Indian universities world class.
 

The economists and experts who were present include Pravin Krishna, Sukhpal Singh, Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Govinda Rao, Madhav Chavan, N K Singh, Vivek Dehejia, Pramath Sinha, and Sumit Bose.