GST beneficial in long-term, says World Bank Chief Economist
The Goods and Services Tax (GST) is a "hugely beneficial reform"
which will cut both transaction costs and double taxation and its
long-term benefits far outweigh the likely short-term impact such as a
price rise, World Bank Chief Economist and Senior Vice President Kaushik
Basu said.
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Kaushik Basu |
"I would cheer it..it is a tribute to Indian democracy," Mr. Basu
said here before delivering the Arijit Mukherjee lecture at IIM
Calcutta.
The Rajya Sabha on August 3 passed the Constitutional Amendment Bill,
to enable both the Centre and the States to simultaneously levy the GST,
by a two-thirds majority. The Bill will now be returned to the Lok Sabha
for its approval. The GST will subsume all indirect taxes currently
levied, including excise duties and service tax. It will be levied on
consumption rather than production.
Efficiency fetish
Mr. Basu said the government must make a rule that (post-GST) trucks
should be allowed to ply unhindered from the point of its loading to
unloading against the present practice of stopping it at every check
post for various tax collections. "Aside from checking freight, there
should no stoppage."
"We have to make a fetish of efficiency and cutting bureaucratic
costs. And this (GST) is a step towards that," he said.
When asked about reports on his joining the race for the top job at
the Reserve Bank of India, he declined to comment. Asked whether he had
met any government officials, he said: "Not on this trip."
He said that he had complete faith in India's growth numbers. "They
were dependable and above board in terms of cleanliness." He said that
room for some conceptual doubts were created as there was some
"reloading on account of incorporating the value added in the corporate
sector." However, despite this lack of clarity, "it is above board and
is done in a very transparent manner."
India vs China
Propelled by three growth-drivers - well-conducted fiscal and
monetary policies and the good fortune of declining oil prices - India's
growth surpassed China's in 2015.
"As Chief Economic Adviser, I had forecast it at 2016... I was wrong
.. it happened in 2015," Mr. Basu said adding that India was now a front
runner in World Bank's chart of major emerging economies.
Later at the lecture, he said India needed to improve its ease of
business and also ensure private sector participation in higher
education.
- The Hindu
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