Hyderabad, Jan 23: Emphasising that the expanding middle class will be the key driver of India's economic growth, Vice President M Venkaiah Naidu on Tuesday said and the need of the hour is to take full advantage of country's demography by creating jobs.
He also said that while India must improve its tax-to-GDP ratio and curb tax evasion, there should be no needless harassment of tax-payers.
"The expanding middle class will be the key driver of India's economic growth in the coming years. With the large population of India, about 65 per cent under 35 years, the need of the hour of is to take full advantage of this demographic number by creating adequate job opportunities for the young population," Naidu said.
He was speaking at the inaugural session on a seminar on Contemporary issues and challenges in Finance, Marketing and Taxation', organised by the Keshav Memorial Institute of Commerce and Science here.
"Merely turning out lakhs of students with degrees is not enough," he said, adding that they must be taught "life skills". While the first and second rounds of major economic reforms were initiated by the governments led by P V Narasimha Rao and Atal Bihari Vajpayee, the third round of reforms by the present government is transforming the economy, he said.
Massive recapitalisation of public sector banks at Rs 2.11 lakh crore is expected to improve the credit growth and private sector investment, Naidu said, adding that introduction of the Insolvency and Bankruptcy Code has strengthened creditors' rights. One of the major objectives of both demonetisation and Goods and Services Tax was to increase tax compliance, he said.
The expansion of formal economy will lead to increased tax collection and higher revenues, which will be used to accelerate development by building essential infrastructure, he said.
"While tax evasion has to be dealt with sternly, it should be ensured that there is no unnecessary harassment of taxpayers by overzealous officials," he said.
The GST has changed the face of the indirect tax regime as it brings one tax instead of a multiplicity of taxes, Naidu said. India needs to ramp up its tax-to-GDP ratio, currently at 16.6 per cent, to fund a modern, twenty-first-century government which can offer basic public facilities and social security to its citizens, Naidu said.
Demonetisation, a special investigation team for black money and the notification of the Benami Transactions Act would bring a wider range of economic activities in the tax net, while the war on black money needs to continue unabated, the vice president said.