Leading economists today asked the government to levy higher taxes on superrich, encourage small savings and try to bring down inflation to 4-5 per cent.
During their customary pre-budget interaction with Finance Minister P Chidambaram, they also suggested introduction of inheritance tax and widening of tax base to increase revenue and contain fiscal deficit.
Inviting suggestions from economists, Chidambaram said economic and political developments in the Eurozone area and the US had their impact on the world economy, including India.
However, he said a slew of reform measures taken by the government had a positive impact on the market sentiments. He said that resolution of 'fiscal cliff' in the US too had positive impact on market sentiments worldwide.
He said that "difficult phase is over" and now focus would be on achieving higher growth during the year.
Chidambaram further said that there are mixed signals from market regarding the current economic situation in the country. He informed the economists that direct tax collections are satisfactory while indirect taxes including excise duty are falling short of expectations.
Suggestions given by economists, according to a release, included "following of principle of progressivity i.e. higher tax rates for high income group, widening of tax base and effective enforcement of tax laws to penalise those who hide their income and pay less tax as well as those who despite high income do not pay any tax at all".
Chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan had recently suggested that government should impose higher taxes on persons with an income beyond a specified threshold.
Many economists favoured introduction of inheritance tax and certainty in tax laws and early resolution of tax disputes in a time bound manner to release money locked in it. There was also a suggestion to set-up Asset Management Office especially to manage central Government urban land in cities.
Some economists asked for quick action to bring inflation down to 4-5 per cent at the earliest, higher investment in health and education sector, higher capital expenditure on agriculture and for increasing storage capacity for foodgrains.
"Another suggestion was to give incentives to boost small savings schemes as savings under these schemes have gone down by 5 per cent over the years. Another suggestion was made to reduce the interest rate and agriculture credit be doubled," the statement added.
They were also for increase in fees