Skip to main content

There is no doubt GST will boost GDP


Infosys founder N R Narayana Murthy believes the goods and services tax (GST) will simplify trade, boost the economy, and generate jobs. While the GST Network might encounter a few teething problems, that was part of any large implementation, he said in an interview with Raghu Krishnan. Edited excerpts:
Do you think implementation of the GST would boost economic growth?
There are different estimates of the impact of the GST. A National Council of Applied Economic Research report says the gross domestic product (GDP) will have an additional 1-2 per cent growth. I’m also told there is a US Fed Reserve report claiming the GST would boost India’s growth by 4 per cent. That would be fabulous.
There is absolutely no doubt the GST will boost GDP, as the new tax regime will remove hassles to trade. This will help entrepreneurs and the whole country will benefit.
Do you think more people will enter the formal economy?
When you have a nationwide tax, which is clear and easy to comply with, it is natural more people will move into the formal sector. Besides generating more revenue for the government, it will also benefit workers in small units. Once you enter the formal sector, you have to follow a lot of rules. The GST will also help improve internal trade.
But commodities such as petroleum and alcohol are out of the ambit…
The first step was creating the GST framework. Including petroleum products will now be easier. The GST has taken a lot of time to get to this stage; we should give the government credit for it. This was not an easy task, requiring the cooperation of various political parties. There are still a few issues. The Prime Minister has shown extraordinary tenacity in making this happen; he could have easily postponed it by a year.
Some products — petroleum, clothing, and footwear — might become a bit dearer. All of us will have to make a few adjustments. I don’t think any progress is possible without a little pain.
There are concerns over the technology infrastructure for the GST…
After 50 years in the technology sector, I have realised there’s no system in the world that will be free of some glitches in the first six months. There might be problems. One way to deal with these is to address these quickly and have rapid reaction teams in New Delhi, the state capitals and wherever possible.
Ships are safest in the harbour. But they are not meant to be there. They have to go into the high seas, face storms and reach the comfort of a desirable destination. Let us not unnecessarily worry about possible problems.
People say there would be an inflationary trend because of the GST…
We are moving towards a value-added tax regime, rationalising multiple central and state taxes. When this is applied across the nations, across all traders, big and small, some commodities will get expensive and some cheaper.  
The beauty of the GST is that it helps the government collect huge amounts of data: Which product is selling for how much, what tax is being collected on it. This huge data will help the government make a proper analysis of how the economy is moving.
We should be a little patient and allow the government a few years.
In your interaction with global investors and leaders what is their perception of the GST?
I don’t think India is very high on the radar screen of most nations. I don't know how many of the senior management personnel are really concerned about the GST. At least based on discussions, I have not felt this has become a big topic of conversations.
This initiative will reduce hassles for anybody who wants to operate in India. They will realise this system is comparable to the developed countries. I don’t think we should be worried about what others think of us.
Business Standard New Delhi, 01st july 2017
 

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…