The Reserve Bank of India (RBI) Governor Shaktikanta Das said that the government's decision on cutting corporate tax rate was a bold measure and would help attract investments.
"This is a very bold measure. These tax rates bring us closer to the rates of all the emerging economies in this part of the world. There's a lot of competition between Vietnam, Philippines and India to attract international investments," Das said.
"One of the major drawbacks that India had was high corporate tax rates. So if corporate tax rates have been brought down, I think they're very bold and welcome and will augur well for the economy," he said.
He was speaking at the India Today Conclave on September 20.
Finance minister Nirmala Sitharaman has proposed to slash corporate tax for domestic companies and new local manufacturing companies through an ordinance.
The effective corporate tax rate will be asked to 25.17 percent inclusive of all cess and surcharges for domestic companies. It will be 22 percent of they do not avail of any incentive it concession.
Das reiterated that the latest growth numbers had woken everyone up, but added that the next set of data for the July-September quarter would be better as the government had started spending again.
On September 19, Das said that the government has very limited fiscal space to support growth, but price stability and low inflation over a year's horizon can help the monetary policy to ease rates further and help boost the economy amid slowdown concerns. Also, that the latest rate cut by US Federal Reserve would help attract foreign investments into the country.
He added that the RBI will take all factors into account while announcing the policy review next month.
Commenting on the autonomy and independence of the Central Bank, Das said that the RBI discusses matters with the government internally and it carries more weight on things it wants to get done.
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