Money & Banking

Corporate tax cut ‘a bold measure’, says RBI Governor

PTI Mumbai | Updated on September 20, 2019 Published on September 20, 2019

A day after stating that there is little space for fiscal measures to pump-prime the sagging economy given its limited fiscal legroom, Reserve Bank Governor Shaktikanta Das on Friday hailed the massive tax giveaway to corporates, describing the move as “a bold measure that is highly positive”.

The 10 percentage points reduction in corporate taxes is worth 0.7 per cent of GDP or ₹1.45-lakh crore in revenue foregone, but will boost the bottomline of most companies by an average of 12 per cent. “These are definitely bold and welcome measures. It will augur extremely well and will be highly positive for the economy,” said Das at an event held here on Friday.

Fiscal impact

The Governor did not speak about the fiscal impact of the massive tax giveaways. Before the tax-cut announcement, addressing the same event, he also noted that one of the major drawbacks of our system was the high corporate tax rates and “today’s drastic cut in the same will take the country closer to the rates that prevail in emerging economies such as Thailand, and the Philippines”.

However, it may be recalled that while addressing an event here last evening, Das had warned the government against any booster measures that will have a fiscal impact, and advocated front-loading of its capex plans in the Budget to help the economy.

Addressing a panel discussion, Das noted that growth has slowed all over the world and not just in India, and external developments do play a role in all economies and that India is very much integrated with the global economy.

Published on September 20, 2019