Policies to play critical role in tackling 'inequality'

India's policies on taxing capital and labour income are likely to play a crucial role in tackling inequality, according to the Economic Survey, presented on Monday.

- SHRIMI CHOUDHARY

This is given the growing need for artificial intelligence, which could have an impact on employment and income, it said.

According to economists and experts, despite experimenting, over the decades, with steep levels of progressive personal tax rates as well as wealth tax and estate duty, the taxgross domestic product (GDP) ratio has remained in single digits.

"Inequality has been increasing and the long-term path is to create more jobs, while in the interim period we need to tax both income and equity at a higher rate. This implies that there could be higher tax rates at upper slabs or a surcharge on the rich. Also capital gains tax on equity can come under the radar screen," said Madan Sabnavis, chief economist, Bank of Baroda.

Citing the 2022 "State of Inequality in India" report, the Survey said it observed that "in India, the top 1 per cent accounts for 6-7 per cent of the total incomes earned, while the top 10 per cent accounts for one-third of total incomes earned".