Ahead of annual budget 2017, India's former chief economic advisor Shankar Acharya has advised Finance Minister Arun Jaitley to follow the dictum of try and do no-harm.
In an interview to India Today, Acharya said that raising the exemption for personal tax would be worst thing to do. ''You are reducing the base and you are giving money to everybody above. So, don't change the base," he said.
Acharya also cautioned the government about any kind of sops. "This is not the time to do huge expensive sops whether through agriculture or social sectors and certainly do not do any version of Universal Basic Income," Acharya said.
However, he suggested that the government should not cut the spending on MNREGA especially at a time when people are losing their jobs.
Acharya also expects the government to boost the defense spending as it had been reduced in successive years.
He also said that the government should reduce the leakages by making direct transfers of big subsidies like food and fertilizer that is needed to generate funds for spending more on defense and infrastructure.
Speaking on the corporate tax, he said it would be extremely unwise to suggest any cut on corporate tax. "My advice to the Finance Minister would be, if you have to cut, do it only 1 per cent," Acharya said.
He also said that the government should try to target fiscal deficit at 3 or 3.2 per cent this year. Acharya explained why it is important and said: "We tend to think about only the Central budget deficits, but there are states as well and they are at least as big when it comes to the fiscal deficit. And, the consolidated deficit of the states and the centre will be around 7 to 8 per cent."