NEW DELHI: While several recommendations of his report on GST have not been adopted, chief economic adviser Arvind Subramanian is satisfied. He tells HT that in a true democracy, it is important to make adjustments. Excerpts:
What will be GST’s immediate impact on GDP growth?
We have not done any such calculations. But potentially, it will help in easier movement of goods within India, compliance will improve, and boost Make in India. Reducing all the barriers will help in pushing the overall growth rate of the country.
Do you think investments will suddenly surge?
You have to ask them (the investors). But let me tell you that there will be no sudden surge in investments, it will happen gradually. I think there was expectation that the tax reform will come through and it was more a signal of using the mandate (of the NDA government that came into power in 2014)
There is fear that the new tax will push inflation. Your take.
I don’t think it will have an impact on inflation. First, about 54% of the consumer price index (CPI) basket will be kept out of the GST ambit. Two, if the rate is fixed at say about 18% there should not be any inflationary pressure.
{{/usCountry}}I don’t think it will have an impact on inflation. First, about 54% of the consumer price index (CPI) basket will be kept out of the GST ambit. Two, if the rate is fixed at say about 18% there should not be any inflationary pressure.
{{/usCountry}}Do you think that the GST in this form is flawed, considering that alcohol and petroleum are outside the ambit?
I wouldn’t say that it is a flawed GST. There is no perfect system. The best should not come in the way of the good. Given that the states had apprehension on the new tax system, this is the best.