Raise taxes on the rich and spend the proceeds on people who require state support: Joseph Stiglitz

Kolkata: Raise taxes on the rich and spend the proceeds on the segment of the population that requires state support. That’s the revival prescription by celebrated economist Joseph Stiglitz for the Indian economy that shrank a record 24% in the June quarter.

“If you don’t spend money, it’s going to be worse,” the Nobel winner said in a virtual global session with Indian business leaders and economists. He said that the government spending has to be well targeted and assist the most vulnerable to maximise the gains despite the budgetary constraints.

Prof Stiglitz has been an advocate of wealth tax to reduce the wealth gap and income inequality that exists in the US.

The Indian government had earlier rejected a proposal put up by the Indian Revenue Service Association to levy higher taxes on the uber-rich to meet the revenue shortfall. The government also took stern action against three officers who allegedly made the report public.

A report in April showed that a 4% higher tax on the nation’s 953 richest families would give the government the equivalent of 1% of India’s GDP to spend.

Prof Stiglitz said that in its fight against the pandemic, India picked up one good idea that is lockdown but did not think through the implementation properly and how that would impact the poor.

The debate was organised by FICCI; ITC chairman Sanjiv Puri, HUL chief Sanjiv Mehta, London School of Economist professor Sumantra Bose and former FICCI presidents YK Modi and RV Kanoria took part in it.

“The pandemic highlighted the need for global cooperation. The only way to solve problems like the Covid-19 pandemic or climate change is cooperation,” the professor at America’s Columbia University said.

He suggested that the countries which have not done well in their fight against the pandemic need to learnt the way New Zealand or Germany tackled the situation.

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