Bangalore, Oct. 12 The report of the Task Force, appointed by the Finance Commission, would be published on the Commission’s Web site soon. It would enable better awareness and constructive policy dialogue, said Dr Vijay Kelkar, Chairman, Finance Commission, at the Executive Committee Meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Monday.
GDP growth
He also said that according to a preliminary report from National Council for Applied Economic Research (NCAER), the growth in GDP could be between two and 2.5 per cent with the implementation of a well-designed GST.
“The increase in exports can be between 10 and 14 per cent. If we use three per cent as a discount rate and lower estimate of the GDP increase of two per cent accruing year after year, the net present value of the GST reform exceeds half-a-trillion dollars,” said Dr Kelkar.
He conceded that putting in place the rules of supply for the inter-State provision of services will be demanding. A set of rules to determine the taxation jurisdiction and appropriation would need to be worked out.
Stimulus package should stay
“For GST to be successful, all States and the Centre should implement it in a similar fashion. Only this will bring about the national common market, which is one of its goals,” he said.
Addressing the media after FICCI’s executive committee meeting, Mr Harsh Pati Singhania, President — FICCI, said, “It is important to recognise that we are still in the early stages of the recovery process and it will take time to consolidate the gains.
“Till that happens, any move to withdraw the fiscal-monetary stimulus packages” will be disastrous.
Similarly, any move by the Reserve Bank of India to tighten the monetary policy “would not be appropriate as it will siphon off the much-needed liquidity from the economy, so critical to beef up demand and fuel growth,” said Mr Singhania.
He suggested that monetary policy action should be withheld by the RBI till the time the economy returns to the eight per cent growth mark and maintains this pace for at least two consecutive years.
Mr Singhania added that the inflationary nature of primary food articles was because of “a structural supply-side deficiency”.
“Moreover, in the current year, given the poor progress and spread of monsoon, and the more recent floods in the South and East, agricultural production is bound to take a hit,” he said, adding that consequently, there will be further rise in inflation of primary articles in the months ahead.
Source : Business Line