Undoing the damage

The recommendations of the Parthasarathi Shome committee on the controversial general anti-avoidance tax rules (GAAR) build on a premise few governments in India have acknowledged: India is a relatively high-cost economy to do business in compared to other emerging markets, both because of higher interest rates and outdated labour laws. In the absence of cheap capital or labour, therefore, the economy can ill afford to play around with its tax rules to create yet more hurdles for investors.

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