Government should cut Income tax to boost demand, says Pawan Goenka

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Davos: On the sidelines of World Economic Forum (WEF) at Davos in Switzerland, Pawan Goenka, Managing Director of Mahindra & Mahindra told Zee Business that the government should take a very aggressive stand to revive the economy. 

He said the government has a very narrow fiscal room, therefore, it will have to keep aside the fiscal deficit target of 3.3% for at least a couple of years. Without deviating from the fiscal deficit target, it would be very difficult for the country to come out of the slowdown, Goenka said, as consumption needs to start.

Goenka said that the country was at the right levels of corporate taxes but there is nothing at the budget level on this. He further said that it will be impossible for the government to cut GST rates on automobiles as revenues would likely suffer as a consequence of that.

In this budget, the sentiments around consumers need to be changed and the government should give priority to it. The government can do this by relaxing income tax rates that would put more money in the pockets of the common man, Pawan Goenka added.  

He said the income tax reduction should be tied with the consumption, adding "If the people start savings with that money, the desired output could not be achieved."

The government will also have to focus on export competitiveness and for this, the country will have to do FTAs RTAs and brand building will have to be done, Goenka said.