Higher tax collection must for infrastructure development: RBI
Reserve Bank of India Deputy Governor Rakesh Mohan has urged the citizens in general and corporates in particular to voluntary pay their taxes and service charges, which the government can invest in infrastructure development to achieve the ambitious 8 per cent growth rate envisaged in the 10th Plan.
Addressing a conference on 'Emerging India's Economic Scenario vis-à-vis the Asian Economies' in Mumbai on Tuesday, he said an important reason for the states and Centre to reduce their budget allocation for infrastructure was that a large number of people were not paying their taxes and service charges.
The seminar was organised by All India Association of Industries.
Mohan said people use roads, water and electricity but not all of them pay charges which leads to breakdown of these utilities.
Giving an example, the noted economist said the weak financial condition of the State Electricity Boards was due to non-payment of bills and power thefts.
To a question, Mohan, an ex-advisor to the Union finance ministry, said the industry developed at a healthy rate between 1992-97 because the then government was aggressively pushing for the tax reforms but the growth slowed down during 1997-2000 as these reforms lost pace.
The RBI Deputy Governor said India can develop like Asia's tiger economies, which grew at a rapid pace between 1960 to 1990, only if the country maintains a growth rate of 5 to 5.5 per cent over the next five year.
Comparing the domestic economy with the rest of the world, Mohan said the Indian economy was just below China in terms of growth rate, while leading economies like USA, Europe and Japan were in doldrums and their outlook was not very optimistic.
Calling for forging a close trade ties with China, he said India can look towards its giant neighbour to improving exports.
