LTCG Tax Changes Must Balance Equity and Efficiency: Ashok Lahiri
NITI Aayog Vice Chairman Ashok Lahiri discusses the balance between equity and efficiency regarding potential LTCG tax changes and India's 2047 vision.
In a cautious take on the future of investment taxation, NITI Aayog Vice Chairman Ashok Kumar Lahiri has stated that any potential LTCG tax changes must be meticulously weighed against two primary factors: equity and economic efficiency. Speaking on the sidelines of the 'Pathways to Viksit Bharat' event, Lahiri avoided taking a definitive stance on whether the current tax structure should be altered, emphasizing the complexity of the issue.
The Delicate Balance of Capital Gains Tax
When questioned about whether modifying the Long-Term Capital Gains (LTCG) tax would be a prudent policy move, Lahiri highlighted the historical volatility of such taxes. He reminded listeners that India has previously shifted its approach, including the abolition of certain taxes and the subsequent introduction of the Securities Transaction Tax (STT).
"I don't want to give a categorical answer because LTCG, as you know, we had it at one point of time, then we abolished it, and we introduced securities transaction tax," Lahiri noted.
He further explained that the government faces a tug-of-war between ensuring fairness (equity) and maintaining a system that encourages investment and market fluidity (efficiency). Because both elements are critical to the health of the equity markets, he declined to offer a "yes" or "no" regarding future policy shifts.
Roadmap to Viksit Bharat 2047
Beyond the intricacies of taxation, the NITI Aayog Vice Chairman shared his vision for India's long-term economic trajectory. To achieve the goal of a developed India by 2047, Lahiri identified four indispensable pillars of growth:
- Education: Building a knowledgeable workforce.
- Healthcare: Ensuring a healthy and productive population.
- Infrastructure: Creating the physical foundation for commerce.
- Entrepreneurship: Driving innovation and job creation.
The Push for Job Creators
Lahiri placed a heavy emphasis on the role of entrepreneurship, arguing that the national mindset must shift from job-seeking to job-creating. He urged the youth to take the leap into business ownership to solve the employment challenge.
"Entrepreneurship is very important… if everyone is looking for a job, we also need people who will provide the jobs," he asserted, directly encouraging students to become entrepreneurs themselves.
Boosting Productivity through Technology
To elevate India's productivity, Lahiri pointed toward a synergy of human capital, physical capital, and entrepreneurial spirit. He argued that technological dynamism is the key, noting that since technology is often embedded in machinery, increased investment is mandatory to see a rise in productivity.
He expressed strong optimism regarding India's current trajectory, citing the flourishing startup ecosystem and the rise of "unicorns" as evidence of the country's prowess in Information Technology and Artificial Intelligence (AI).
Government Support Systems
Concluding his insights on policy, Lahiri mentioned that achieving the 2047 vision requires a multi-pronged approach. He highlighted existing government efforts, such as the Production Linked Incentive (PLI) schemes and the Atal incubation programmes, as vital tools in supporting the nation's development goals.