Terming the government's recent move to slash corporate tax rate as a bold measure and a highly positive step, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that it made India a very attractive destination for foreign investment. He said ‘India's corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia. So far as international investors are concerned, so far as FDI is concerned, I think India stands definitely in a very competitive position, and would be able to attract higher investments.’
About domestic investors, he said, they now have more cash so they will be able to undertake more capital expenditure. He also said they can invest more and some of them can deleverage their liabilities which will add strength to their balance sheets. In the biggest reduction in 28 years, the government on September 20 cut corporate tax rate by almost 10 percentage points as it looked to pull the economy out of a six-year low growth and a 45-year high unemployment rate by reviving private investments with a Rs 1.45 lakh crore tax break. Base corporate tax for existing companies has been reduced to 22% from the current 30%.
Besides, the three-day monetary policy committee meeting will begin on October 1 amid expectations of rate cut to be announced on October 4 in a bid to revive the sagging economy. Earlier, Das had said the government has limited fiscal space to support growth, but low inflation can help the monetary authority ease policy rates further and help boost the economy. The RBI has already cut rates four times to the tune of 110 basis points this year to push growth.
