Economists suggest FM to maintain fiscal consolidation

New Delhi: Leading economists on Monday advised finance minister Arun Jaitley to follow fiscal consolidation path in the forthcoming Union Budget, lower corporate tax to 20 per cent, increase disinvestment of  PSUs and tax long term capital gains to bring equity.

Mr Jaitley had a pre-Budget meeting with economists and information technology representatives in the North block.

During the meeting, economists suggested that the government should continue to follow the path of fiscal consolidation and in case, there is any shortfall in achieving the target, it should be clarified.

Similarly, they said in the forthcoming Budget, the road map for tax reforms may also be announced.

It was also suggested that without compromising on macro-economic stability, more incentives be given on infrastructure investment as well as to SMEs and construction sectors to make them viable, give farmers more remunerative prices for their produce keeping in view the target of holding inflation between 4-6 per cent.

Another suggestion was to give more thrust on divestment of PSUs as it will provide extra revenue for bridging the fiscal gap and meeting the expenditure needs.

Some economists  also asked Mr Jaitley to lower the corporate tax up to 20 per cent by removing all exemptions in order to make it competitive at international level.

They also advised the Centre to tax Long Term Capital Gains to bring equity and raise revenue, reduce MAT (Minimum Alternate Tax).

It was suggested that the crop insurance scheme be relooked and be made more effective. It should cover not only the crop failure but also the price failure.

Economists also advised that the compliance in tax can be increased by rationalisation of taxes and the cost of tax compliance may also be reduced.