As India gears up for the Union Budget announcement on February 1, all eyes are on the government’s tax policies and economic strategies. Amid growing expectations from individuals, businesses, and investors, Ashneer Grover, founder and former MD of BharatPe, has voiced his views on taxation and economic reforms, advocating for a simplified tax regime and reduced government spending to boost economic growth.
Grover raised concerns over India’s taxation policies, highlighting that while tax collection has surged, economic growth remains stagnant.
“We have the largest CapEx spend by the government ever, the highest borrowing to fund that CapEx, and some of the highest tax collection growth rates in the world, yet our economy is stuck at a 6% growth rate. That is the biggest challenge we need to first acknowledge and then address in the Budget,” he stated.
He questioned where the government’s increasing tax revenues were being allocated, emphasizing that despite higher spending, Foreign Direct Investment (FDI) is at its lowest in 2024 and Foreign Institutional Investors (FIIs) have been pulling money out of India in recent months.
A Call for a Unified Tax Rate
Ashneer Grover proposed a radical simplification of India’s tax structure, advocating for a flat income tax rate and rationalized capital gains tax.
“India needs a simple income tax rate of 20% across the board—no differentiation between corporates, salaried individuals, or business owners. Additionally, capital gains tax should be a flat 10%, irrespective of whether assets are listed or unlisted, long-term or short-term. Why distort the market with unnecessary classifications?” he argued.
He also criticized the complexity of the Goods and Services Tax (GST) structure, calling it “unnecessarily complicated” and urging the government to streamline it for better compliance and economic efficiency.
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Growth Through Private Sector Confidence, Not Government Spending
Grover dismissed the notion that government spending alone can drive economic growth, stating that more money needs to be left in the hands of businesses and individuals.
“The government’s focus should be on enabling growth, not just optimizing tax collection. Real economic expansion will happen when people have more money in their hands to invest in productive ventures, not when the government increases its spending.”
He further highlighted over-regulation as a major challenge stifling Indian businesses, suggesting that excessive bureaucratic hurdles are slowing down entrepreneurship and innovation.
“An Indian businessman today spends more time with his lawyer, CA, and fixers than with customers and in the market. Overregulation is killing enterprise. If we solve for taxation and remove unnecessary regulations, we can achieve double-digit growth.”
Entrepreneurs Need to Feel Recognized: Ashneer Grover
Ashneer Grover comments on the growth of the quick commerce industry, says that India is flooded with fresh ideas but what lacks is the supportive environment. He said, “Entrepreneurs need to feel that their work is being recognized by the market, that they are not wasting their time, and that they are not burdened by unnecessary taxation or bureaucratic hurdles. If such an ecosystem exists, we have enough smart individuals who can build successful businesses.”
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He added saying, “What we did was leverage the UPI wave to build BharatPe. But there are hundreds of other sectors that can be digitized. People are already working in these areas, but we need to create the right environment for them.”
Perhaps the Finance Ministry needs to bring in new people. Maybe it’s time for actual business leaders to shape financial ministry instead of career economists and lawyers. That could make a real difference. After all, even if we take risks, how much can we really lose?”
GST, Gaming Industry, and Tax Rationalization
Grover also criticized the government’s approach to sectors like online gaming, where high taxation is used as a tool of regulation.
“If the government thinks an economic activity is harmful, then ban it. Why tax it at 28% and then legalize it? The same applies to alcohol and fuel—why aren’t petrol and diesel included in GST yet?”
He called for a uniform GST rate of 5% across all sectors, arguing that the current multi-tiered structure distorts the market and creates unnecessary complexities.
A Businessman in the Finance Ministry?
In a bold statement, Grover suggested that India’s finance ministry needs a fresh perspective, perhaps even a leader from the business world rather than traditional economists or career bureaucrats.
“Maybe it’s time we have actual businessmen running the finance ministry rather than career economists and lawyers. How much worse can it get from here? We need fresh thoughts on how the economy is managed.”
Ashneer Grover’s comments reflect a broader sentiment in the business community—that the Budget should focus on simplifying taxation, reducing government interference, and fostering a business-friendly environment to drive India’s economic growth. With Budget 2024 around the corner, it remains to be seen whether the government will take steps toward these much-debated reforms.
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