India needs to provide more tax breaks to individuals so as to encourage savings, RBI Governor Raghuram Rajan has said.
More tax benefits need to be given to encourage savings as the "real value of the financial benefits given (in recent years) has eroded," Rajan said in his Bharat Ram Memorial lecture here on Friday.
Rajan's remarks are significant as it comes at a time when Finance Ministry has begun work for the upcoming budget in February next year.
The erstwhile UPA regime --while being too business friendly--had not been liberal in providing tax breaks to encourage savings.
Thanks to the runaway inflation in last two to three yers of the UPA regime, savings rate in the country has sharply declined to about 31 per cent from level of 38 per cent some years back.