Arun Jaitley with his team before the Budget yesterday. Pic/AFP
New Delhi: India's economic growth is likely to dip to 6.5 per cent this fiscal after the shock demonetisation shaved off a good 0.5 percentage points but it will rebound to 6.75-7.5 per cent in the next financial year, Economic Survey said yesterday, calling for bold cut in tax rates.
The pre-Budget pointer called for a cut in individual income tax rates and a timetable for reducing the corporate taxes and for widening the net to progressively encompass "all high incomes".
Though the survey did not indicate what it meant by all high incomes, the reference may be to agriculture income which is currently out of the tax net.
Prepared by a team led by Chief Economic Adviser Arvind Subramanian, the survey said economic growth is expected to return to normal as new currency notes in required quantities come back into circulation. Indian economy had grown by 7.6 per cent in 2015-16 and was projected to grow by 7.1 per cent in the current fiscal by the Central Statistical Organisation (CSO) that did not fully account for the disruption demonetisation had caused.
"Over the medium run, the implementation of the GST, follow-up to demonetisation, and enacting other structural reforms should take the economy towards its potential real GDP growth of 8 per cent to 10 per cent," said the Survey tabled in Parliament by Finance Minister Arun Jaitley ahead of Union Budget 2017-18 today.