Taxation changes, sectoral reforms top NITI Aayog’s draft three-year action agenda

Our Bureau New Delhi | Updated on January 15, 2018 Published on April 25, 2017

NITI Aayog Vice-Chairman Arvind Panagariya (left) and Member Bibek Debroy addressing a press conference in New Delhi - Photo: Kamal Narang

Niti Aayog Vice Chairman Arvind Panagariya. File Photo   -  The Hindu

Will hold discussions and seek comments from States: Vice-Chairman Panagariya

Breaking away from the five-year planning process, NITI Aayog has readied a draft three-year action agenda and circulated it to the States for comments.

The agenda includes proposals for shifting additional revenues to high priority sectors, doubling farmers’ income by 2022, creating jobs, bringing down land prices and expanding tax base through measures such as taxing agricultural income.

“The draft has been prepared through extensive consultation with State governments. I have already written to the States seeking their comments on the draft. Next month, I and other senior officials from NITI Aayog, would be travelling to different States for discussions,” NITI Aayog Vice-Chairman Arvind Panagariya said at a press conference on Tuesday.

The BJP-government has brought to an end the five-year plan process and is replacing it with a vision, strategy and action agenda framework for aligning development strategy with “changed reality of India’’.

The action agenda will span a three-year time frame involving mostly executive decisions, the strategy will be for a seven-year period and include decisions that need legislative changes while the vision would be for 15 years and incorporate institutional changes that may need Constitutional amendments.

Tax reforms

The draft action agenda makes a strong case for tackling tax evasion, expanding the tax base and simplifying the tax stem through reforms. One related proposal is consolidating existing custom duty rates to a unified rate. “We believe that it is feasible to have a unified custom duty of 7 per cent. It will result in a rise in customs revenue and address problems of misclassifications and inverted duties,” Panagariya said.

NITI Aayog member Bibek Debroy made a case for removal of exemptions on personal income tax and bringing agriculture income under the tax net above a threshold limit same as what applies to individuals in urban areas.

This would widen the tax base and more funds could be made available for the social sector schemes, he said.

On the threshold limit for taxing agriculture income, Debroy said that while it should be the same as what is applicable in urban areas, income could be calculated based on the past three years or five years as agriculture income varies depending on the monsoons.

Land prices

In the area of urban development, the draft stresses on the need to bring down land prices to make hosing affordable through increased supply of urban land. It proposed more flexible conversion rules from one use to another, release of land held by sick units, more generous floor space index, reform in the Rent Control Act and promoting dormitory housing.

Job creation

For creating jobs, the action points include creation of Coastal Employment Zones to boost exports and generate high-productivity jobs and enhancing labour-market flexibility through reforming key laws.

The action points also propose addressing high and rising share of NPAs in India’s banks through supporting the auction of larger assets to private asset reconstruction companies and strengthening the State Bank of India-led ARC.

Published on April 25, 2017
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