Niti Aayog Vice-Chairman Arvind Panagariya called for a simpler tax regime, elimination of exemptions and precise taxation rules to minimise discretion to prevent the accumulation of black money and build on the benefits that will accrue from demonetisation.
“To discourage the creation of black money and curb corruption, we will also need to tackle election funding,“ Panagariya told ET in an interview, backing the Election Commission's call for a cap on anonymous donations at Rs. 2,000.
“There is also a proposal for state funding of elections, which may be considered.“
Tax reforms will also help lower rates, encouraging savings and boosting revenue through greater compliance. He said demonetisation is likely to bring significant gains in tax revenue, which may allow the government to raise expenditure without violating
any of its fiscal goals.
Panagariya said without data it may be difficult to estimate impact of demonetisation on the economy in current year but “we will more than recover any decline in the growth rate this year in subsequent years“. He also called for more ef forts to make digital
transactions a habit instead of a one-time affair. “Right now the shortage of cash is an obvious reason for individuals to transact digitally but it is important that this compulsion is turned into a choice and indeed habit.” Panagariya is also not in favour
of universal cash transfers and instead prefers a more targeted approach to reach out to the poor. “I lean in favor of a strategy that places a larger volume of cash in pockets of the poor than the one that gives cash to everyone in smaller amounts,” he said.
- www.economictimes.indiatimes.com [22-12-2016]