Discuss the possible and feasible fiscal strategies that are required for sustaining the economic growth of the country. (200 Words)
Refer - Business Line
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IAS Parliament 3 years
KEY POINTS
· Central direct taxes peaked at 6 per cent of GDP in 2018-19. The average over the last decade was 5.5 per cent it rose to 6 then fell.
· The 15th Finance Commission (FC) estimates the feasible improvement of tax/GDP ratio is 0.7 percentage points each for the Union and the States by 2025-26. .
· The quality and composition of Centre and State spending can be improved by restructuring expenditure towards raising capacity and lowering costs. Direct benefit transfers are reducing leakages.
· Since past decisions have left the government with large resources that are poorly monetised, asset monetisation can help transform the expenditure profile to supporting quality public goods and services.
· Income tax payers are still disproportionately low, comprising largely of the salaried, but even so the share of households in direct taxes has risen to 75 per cent.
· Technology and databases can be used to increase the tax base, while keeping rates reasonable, even as tax-payer compliance costs, harassment and litigation are reduced.
· Industrial policy that uses taxes/tariffs/subsidies to promote activity must be time-barred and conditional with strict sunset clauses.
· Local taxes and user charges have to rise as part of empowering the 3rd Tier and will be more acceptable to the extent they are linked to clear benefits.
IAS Parliament 3 years
Try to include data to support your arguments and bring coherence in your answer. Keep Writing.
Nivetha 3 years
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IAS Parliament 3 years
Try to bring coherence in the answer and includ data to suport your arguments. Keep Writing.
