Over last several months, several reforms have been rolled out by the NDA government. Most of these are supply side mesaures and top 3 of them are:
1. Reduction in corporate tax.
2. 20Tn Rs Atmanirbhar package - mostly in form of credit.
3. Farm Bills - Freedom to farmers to sell produce out of APMC.
However, these measures will only help when there are proportionate reforms on the Demand side. The middle class which is the highest contributor to direct and indirect taxes needs sufficient cash in hand or incentives to spend. The government should do the following in the least effective immediately:
1. Slash personal income tax by half across all brackets or double the brackets with same rates(the former option being better).
2. Incentivize the middle class to spend on the items having higher GST rates and provide them tax exemption on the GST paid.
3. The business class gets tax benefits on purchase of cars via depreciation benefits. The government should pass on these benefits to the salaried class. This will give huge boost to the collection of compensation cess and GST along with the direct and indirect jobs the auto industry would create.
