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Thomas George
BANGALORE, INDIA: The economic survey results have really set a positive preamble to the budget and set the stock markets rallying yesterday. Taking a cue from the direction railway budget took and yesterday’s economic survey results, we assume today’s budget presentation will have many major reforms in offering.
The key highlights of the survey were that the country's growth for FY’15 is pegged at 7.4 percent and the survey expects Indian economy to grow at 8.1-8.5 percent in the coming fiscal year with newer base. This also highlights the fact that India at present stands at a juncture, where big reforms can be rolled out and we can achieve new growth trajectories.
The announcements and clarity on the GST implementation roadmap will be one of the most awaited one. Economic survey itself hints that GST can play a major role in the revenue generation, which is also a key priority for the government and could possibly be the single largest reform after independence.
Any clarity on the aids state will receive in lieu of their revenue losses and neutral rates will encourage an early GST roll out. GST will simplify the indirect taxes; state taxes like VAT, CST, ET, octroi and entry tax, purchase tax, luxury taxes and central taxes like CVD, service tax and central ED -all will get incorporated in it.
Following will be the advantages of GST:
- Simplification and lesser number of tax categories
- Uniformity in tax structure across the country
- A solution to inverted duty structure
- Acceptable input tax credit
- Decrease in disputes
- Contentious transfer concerns will be addressed
Could we expect big bang reforms announcements with rationalizing expenditure budget from Mr. Arun Jaitley in order to bring the fiscal consolidation or will he prefer to roll out a populist budget with more subsidies dolled-out?
My guess is fiscal prudence shall prevail and it might give space to rate cuts, which will rejuvenate the investment cycle and spur growth. Wishing FM all the very best.