Shaking Up Elections, Corporate Tax: What India's 3-Year Plan Looks Like

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The NITI Aayog was formed by PM Narendra Modi to replace the earlier Planning Commission.


New Delhi: 

Highlights

  1. NITI Aayog proposes 3-year agenda after PM meets Chief Ministers
  2. Suggests simultaneous Lok Sabha and assembly polls from 2024
  3. Corporate tax holiday for job creators, farm tax reform also suggested
Any talk of taxing farm incomes turned out to be a political hot potato but NITI Aayog's three-year action agenda - discussed between Prime Minister Narendra Modi and the Chief Ministers last week - has set out several ambitious goals.

One of the most far reaching suggestions by NITI Aayog is to hold simultaneous Lok Sabha and assembly polls from 2024. The report says, "There should be synchronized two-phase elections even if that means curtailing or extending the tenure of some assemblies in national interest."

The action plan says that the Election Commission should form working groups of stakeholders and submit a report by March 2018.

On curbing black money, the action plan says tax rates should be moderate and transparent. Real sector should be reformed and Aadhaar should be linked to real estate transactions, it says.

The most interesting part is with regard to taxes on agricultural incomes. On Wednesday, NITI Aayog had claimed that member Bibek Debroy's suggestion - that ultimately the rural sector including agriculture should be taxed - was his personal view.

But the final report said: "All agricultural income is currently exempt from income tax regardless of its size. While the provision is meant to protect farmers, non-agricultural entities sometimes use it to evade taxes by declaring agriculture as the source of their income. In order to mitigate the generation of black money, the loopholes need to be plugged."

Another ambitious project is to create well-paid jobs. Comparing India with China's job growth, the report says, "Many super competitive firms in China today employ not just tens of thousands of workers but hundreds of thousands of them. In contrast, there are hardly any firms in India employing hundreds of thousands of workers."

NITI's action plan says companies that create 10,000 jobs within three years of setting up should be given a corporate tax holidays for five years. It has also suggested zero per cent GST for six years to companies that employ 20,000 workers.

Other suggestions include setting up coastal employment zone and faster labour reforms.

At Confederation of Indian Industry's annual session on Friday, the head of NITI was blunt about the private sector's track record of creating jobs.

"Why I do not see a single industrialist putting up a factory of 250,000 workers doing apparel?" asked Dr Arvind Panagariya.

At the moment, NITI Aayog's draft report has been circulated among state governments for their will give their feedback and suggestions before the policy think tank finalises India's growth roadmap.


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