Raghuram Rajan opposes wealth redistribution tax
image for illustrative purpose
Former Reserve Bank of India (RBI) governor Raghuram Rajan has opposed the idea of wealth redistribution tax. Seen as an economic expert close to the Congress, his comments on the subject may be seen as a repudiation of the remarks by Sam Pitroda, chairman of the Indian Overseas Congress and a Gandhi family confidant.
At an event at the Kellogg School of Management, Northwestern University, Rajan reportedly said having inclusive growth will increase the pace of growth, but taxing the wealthy is not the solution to achieve the same. “We need to try and elevate rather than bringing (sic) the successful down,” he said.
Pitroda supported something like the inheritance tax in the US. The Bharatiya Janata Party lapped it up, and alleged that the Congress would redistribute the wealth of Indians if successful in the general elections. Even as the Congress dissociated itself with Pitroda’s remarks, the BJP continues to accuse the principal Opposition party of the same.
“I’m not the Opposition. I like to emphasise that and I’m an academic, and academics have a duty to criticise what? They don’t see us working well, both sides, right? So that’s what I do. Uh, look, I think we need to figure out how we get the people who are not doing well to actually do better and that will increase growth. Having inclusive growth will actually increase the pace of growth. And I’m not saying we should, you know, tax the wealthy to a huge extent or anything of that sort,” Rajan said.
He further said that there needs to be thorough examination of the parts of the economy that have not benefited or have suffered a K-shaped recovery. He added that the first cost of not utilizing these parts of the economy is wasted resources such as the lack of contribution of mines to India’s growth story. While emphasizing the wastage of resources, Rajan said that the bigger consequence of this is more social conflict.
