India to enter 8% growth trajectory in 2-3 years, Niti Aayog says | business-news | Hindustan Times
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India to enter 8% growth trajectory in 2-3 years, Niti Aayog says

In its 3-year draft action agenda, it has also stressed upon the need for reforms in taxation, agriculture and governance for accelerating all-round development of the country.

business Updated: Apr 28, 2017 15:09 IST
Niti Aayog vice chairman Arvind Panagariya and CEO Amitabh Kant
Niti Aayog vice chairman Arvind Panagariya and CEO Amitabh Kant(PTI photo)

The government‘s think tank NITI Aayog expects India’s growth rate to return to the 8% plus trajectory in 2-3 years, paving the way for faster reduction in poverty during the next decade.

In its 3-year draft action agenda, it has also stressed upon the need for reforms in taxation, agriculture and governance for accelerating all-round development of the country.

“Indeed, there are good prospects that we will return to 8% plus growth trajectory in another 2-3 years if not sooner. Therefore, the chances of massive cut in the poverty rate in the upcoming decade are excellent,” said the 208-page agenda circulated among the chief ministers on Sunday.

The action agenda will replace the five-year planning system. The 12th Five Year Plan, the last of the series, ended on March 31.

On taxation reforms, the Aayog has proposed doing away with corporate tax exemptions and bringing down the tax rate from 34% to 25% (including surcharges and cesses) for all companies.

Finance Minister Arun Jaitley has already announced plans to cut corporate tax rate to 25% in a phased manner.

The Aayog further said the income tax exemption threshold should remain unchanged for inclusion of greater proposition of individuals in the tax net over time.

“However, the tax slabs corresponding to the lowest tax rate should be expanded to ensure that the tax liability of lower income individuals does not increase suddenly with the growth in their nominal income,” the draft agenda said.

In the Union Budget 2017-18, the income tax rate on income between Rs 2.5 lakh and Rs 5 lakh was lowered to 5% from 10%.

Referring to the customs duty, the agenda makes a case for a uniform customs duty of 7% to do away with the problem of inverted duty structure, one of the grudges of the domestic industry.

With regard to farm income, it said the government should plug the loopholes to stop misuse by non-agriculture entities to evade taxes by declaring agriculture as a source of their income.

On doubling farmers’ incomes by 2022, the paper has suggested a reform in the Agricultural Produce Marketing (APMC Act) to ensure that farmers receive remunerative prices.

It further said productivity should be raised through enhanced irrigation, faster seed replacement and precision agriculture.

On the governance front, the draft pitched for recalibrating the role of the government by shrinking its involvement in activities that “do not serve a public purpose” and expanding its role in areas that necessarily require public provision.

Further, the action agenda also emphasised on strengthening the civil services through better human resource management, e-governance, addressing anomalies in tenures of secretaries and increasing specialisation and lateral entry.