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Economists call for enhancing tax base
News:
A group of economists has suggested various measures to address economic concerns in India
Important facts
Concerns:
- Income distribution in India is extremely unequal with income of higher income groups rising much faster than the rest.
- Job opportunities in India remains limited with not enough jobs being created.
- India is not well positioned to follow export-led growth path.
- Sharp rise in local pollution levels, CO2 emissions which if unchecked, threatens to stall or reverse socio-economic progress.
- Consolidated fiscal deficit of 6.5% of GDP higher than most G20 countries and current account deficit has widened.
Suggested Reforms:
- Job: There is an urgent need to create jobs for semi-skilled, amend labour laws & strengthen MNREGA for landless labourers
- Government Finances: It is important to prioritise spending, expand tax base, reduce state fiscal deficit with incentives to better performers.
- Regulations: It is necessary to strengthen independence of regulatory institutions. Further there is a need for more predictable & better regulatory environment.
- Farm Sector: Land holding-linked fixed cash subsidy should be provided. There is also an urgent need to improve access to markets and build infrastructure.
- Financial Sector: A need to reduce the statutory liquidity ratio and substituting this with the liquidity coverage ratios and net stable funding ratios set by Basel.
- Further, it is important to clean up bank balance sheets by reviving projects and also improve governance before recapitalisation.
- Social security: Economist have suggested cutting down the multiplicity of schemes, explore cash transfers instead of food via PDS, introduce index pension.