Increase GST rates for higher tax collection: Rathin Roy
The silent fiscal crisis has hit us owing to a shortfall in tax revenues, but the government was in denial. It has been unable to collect taxes due to a shortfall in corporate taxes, central excise, customs revenue and goods and service tax (GST) and this year, the fiscal deficit has increased from 3.3% to 3.8% of the gross domestic product (GDP). I suggest that GST rates should be higher if the government wants to collect taxes,” said Rathin Roy, director, National Institute of Public Finance and Policy (NIPFP), Delhi.
He was speaking at a panel discussion on Union Budget 2020-21 organised by the Pune International Centre (PIC) in Pune with Pradeep Apte, professor, Gokhale Institute of Politics and Economics (GIPE); KL Dhingra, director, National Institute of Bank Management (NIBM) and Shubhashis Gangopadhyay, research director, India Development Foundation (IDF) present at the event. The programme was chaired by economist Ajit Ranade. Vijay Kelkar, vice-president, PIC and Prashant Girbane, director PIC were present at the event.
“It was a contractional budget as the government could not show how it was maintaining its expenditure levels,” said Roy.
Shubhashis Gangopadhyay, said, “We talk about deficit, but have no clue why it needs to be in check. Investment to GDP ratio is rising and consumption on GDP ratio is falling and we talk about purchasing power parity (PPP) in everything. Agricultural income was supposed to double in 2014, but we are still ‘working’ over it. Considering the education sector, a lot of money goes to standalone institutes, which have no students below the age of 25 instead of government universities, where fund for research is desperately needed.”
Pradeep Apte stated, “The economic survey talks about non -productivity of several economic legislations and ease of doing business, but ignores the agriculture sector.”
“We were expecting stimulus package and revival of GDP from the budget. Everything is a part of the economy whether it is new tax regime, affordable housing, education or MSME sector and the government has focused on most of these sectors especially the banking sector and NBFCs by giving them liberty and credit support. The government is also restructuring loans for micro small medium enterprises (MSME) sector and is trying to provide it with quest equity, which can increase the leveraging capacity of the sector,” said KL Dhingra.
Vijay Kelkar added, “There has been no quick-fix in the budget on how to handle the economic crisis. We have to admit that we are in ‘growth recession’ and it is a huge problem. We require macroeconomic adjustments and interconnecting measures to deal with the present crisis.”