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Domestic savings can give India 10% growth

Dr Swamy call “abolish income tax”

Indian parliament.

Domestic savings and not foreign investment can take Indian economy on a 10% growth path, for which Income Tax must be abolished and interest rates on Fixed Deposits be raised to 9% along with the reduction in the banks’ Prime Lending Rates (PLR), senior BJP leader and Member of Parliament (MP), Dr Subramanian Swamy said at an ASSOCHAM function in New Delhi 10 Jan 2018.

Delivering the 98th ASSOCHAM Foundation Day lecture, Dr Swamy said one of the important ways to put the economy on a double digit expansion mode would be to “raise savings and abolish the Income Tax.”

In his frank address, the renowned economist who has also brought several social issues in the public domain, said the Income Tax should be abolished “right now” and once it is done, people would “celebrate” not because they are fed up paying taxes but they are fed up with the inspectors. Also the inspectors have become “instruments of political oppression.”

The alternates to income tax can be found in avenues like coal block and spectrum auctions, the big revenue grosser for the exchequer, said Dr Swamy.

He said it is the domestic saving by Indian households which holds the key to reviving investment and not the foreign investment. Till about three years ago, the domestic saving was about 35% of the country’s GDP and this figure has dropped down to 29%, as interest rates on fixed deposits have come down. The foreign investments contribute only two per cent of India’s investment. Unless the foreign investment is accompanied by technological transformation, it is not of much use for the economy.

Dr Swamy said the banks must also bring down the PLR to 9%, as high lending rates have particularly hit the small and medium enterprises, which are the biggest source of employment, the need of the hour.

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