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

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and