Mumbai: A day after cautioning government against any fiscal measures to pump-prime the sagging economy given its limited fiscal legroom, Reserve Bank governor Shaktikanta Das hailed the massive tax giveaway to corporates, describing the move as "a bold measure that is highly positive".
In a major fiscal boost, finance minister Nirmala Sitharaman Friday morning slashed effective corporate tax rates to 25.17% inclusive of all cesses and surcharges for companies cheering everyone.
The 10%age points reduction in corporate taxes is worth 0.7% of GDP or Rs 1.45 lakh crore in revenue foregone, but will boost the bottomline of most companies by an average of 12%.
"These are definitely bold and welcome measures. It will augur extremely well and will be highly positive for the economy," Das said. The governor did not speak about the fiscal impact of the massive tax giveaways, though.
Before the tax cut announcement, addressing the same event, he noted one of the major drawbacks that of our system was the high corporate tax rates and "today's drastic cut in the same will take the country closer to the rates that prevail in emerging economies such as Thailand, and the Philippines."
