The recent release of Indian economy GDP figure of Jan-March quarter was unexpectedly lower at 6.1%. FM Arun Jaitley claims that the latest GDP fall can be overcome by the implementation of GST from July 01 this year.
India’s Growth Story Before GST
The present downfall in GDP growth rate is a disappointment and the only solution that is visible is GST. Years back the GDP growth rate was 8% and the last growth was calculated at 7.1% which was still ok but the present rate seems to be a cause of worry for the government as major sectors like manufacturing, infrastructure development and SMEs have seen downfall. Though the government has only GST as a solution, many intellectuals believe that GST will cause great misery to the nation if implemented now.
Why Expecting GST to lift Indian Economy?
If you ask any government official or BJP minister on flip-flops in Indian economy, the only solution that he/she can offer you is GST. When asked about the relatively low figure of GDP growth, Finance Minister Arun Jaitley said that this problem will erase after the implementation of GST. He also said that this GDP rate is fairly reasonable given the global economic conditions.
Implementation of GST will widen the tax base where most of the sectors will come under tax radar which was previously exempted. Earlier there was no registration for manufactures whose turnover was less than 1.5 crore but under GST they will have to get registered with a turnover of 19 lacs. Also many more sectors have been included in the GST and tax slabs have been fixed that will reap more revenue for the Center.
The simplicity or one nation one tax is also a reason as paying taxes will be easier and it will attract more FDI that will boost the economy. The government is expecting private investment which is now at very low. GST has remained a dream of PM Narendra Modi from a long time and its implementation may see few more reforms later by the PM.
Dr. Subramanian Swamy who is a known economist and BJP minister said that GST must be implemented in 2019 as this time is not perfect for it. He said that the government has done no preparation on the ground for GST rollout and as the market was hit from demonetization, the GST rollout will be another kneejerk for the market as synchronizing with GST will tend to slow down the economy. He has a problem with GSTN too and he claims to be “Anti-National”!