Reserve Bank Governor Shaktikanta Das Friday said the reduction in corporate tax is a bold measure, which will be highly positive for the economy. “These are definitely bold and welcome measures. It will augur extremely well and will be highly positive for our economy,” Das said at an event organised by India Today.
He said one of the major drawbacks that “we had was high corporate tax rates and today’s drastic cut in the same will take the country closer to rates that prevail in emerging economies such as Thailand, and the Philippines”.
Das was hopeful that the second-quarter GDP numbers will be better than the previous one, as the government has started spending again. Attributing the 5 per cent GDP growth in Q1 to very low government spending, he said with the Centre opening its coffers again, growth should pick up going forward. He said future rate cuts will depend on the incoming data, but warned that India cannot have lower interest rates like in advanced economies.
“How much more we can go down (with the rate cuts)? We cannot go down to the levels of advanced economies. But how much we can go down will depend on the incoming data and other developments,” Das added.
He said that most advanced economies are having near zero inflation and therefore their rates are also low. “But our inflation target is 4 per cent, and therefore, that should be the guiding force.”
Das said as the full-service central bank, the RBI doesn’t have a specific view on what should be the real interest rates. The governor also said RBI started noticing signs of slowdown in the economy from February and blamed the lowest growth rate in six years in the June quarter at 5 per cent to the lower government spending.