Wednesday, February 4, 2015

Taxation Policy of Indian Government for the Next Two Decades - Some Ideas

India can grow at the rate of 10% in real terms for the next two decades. In this context what should be the taxation - revenue policy of the Government of India.

Government revenues should increase at the rate of 10% every year in real terms if the public sector is going to have the present share in the economic activity of the country. At this moment I do not recommend any decrease in the share of the government. Hence revenues of the Govt. have to increase 10%.

 But that does not every year it has to be 10%. The increase can vary between 5 to 15% depending on the business cycle and what Government wants to do in terms of promoting private investment. It means fiscal deficit also varies year to year with a long term target that is achieved periodically.

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