Federal Finance Minister Arun Jaitley said on Wednesday that the implementation of the Goods and Services Tax (GST), coupled with the impact of demonetisation can give a formidable push to India’s growth rate.
“The digitisation of economy that happened following demonetisation, which, subsequently, will lead to expansion of formal economy, and GST – both these factors have the capacity to boost economy and increase the growth rate,” Jaitley said.
“I hope we will be able to see their impact this year only,” he added at the conference on ‘GST: The Game Changer for Indian Economy’ organised as a part of the ongoing Vibrant Gujarat Global Summit 2017.
The minister hoped that the critical issues of dual control and cross-empowerment in the GST will get resolved over the next few weeks.
“GST Council is deliberative democracy in action. Most of the issues have been sorted. Some critical issues remain and I hope… they will be sorted out,” Jaitley said.
“We want the GST to be in force by April 1, if all issues are sorted out, he said, adding “since the constitutional amendment has been passed, it is mandatory to implement the GST before September 16.”
When GST merges all the taxes and makes India into one entity, it’s an advantage to the assessee as there will be no cascading effect of tax and will lead to larger revenues for states, he said.
Talking about the inconvenience caused to various sectors because of the current cash crunch, he said difficult decisions initially pass through difficult phases and the real impact of demonetisation would be felt after this transient inconvenience.
“It can have temporary transient pain attacks, but in medium and long term, the roadmap on which the country is destined to move can change,” he said.
Meanwhile, financial advisory major IndAsia Fund Advisors said that subsiding demonetisation pain might eventually lead to a splurge in spending on items that were deferred during November and December 2016, says a Mumbai report.
“Firstly, the demonetisation pain seems to be over,” Pradip Shah, chairman of IndAsia Fund Advisors, said.
“There is optimism that the distribution of cash in the country, the availability of cash and therefore the velocity of circulation of money will dramatically improve than what we have seen in November-December, and so things will be back to normal.”
“Possibly there will be a splurge in spending on items that were deferred in November-December. That’s the optimism.”
According to Shah, India is expected to maintain its position as the fastest growing large economy in the world.
“For the next several years, we will continue to do well because of the past investments and the changes made by Prime Minister Narendra Modi and his government. That momentum will continue,” Shah said.
Indo-Asian News Service