The second part of Economic Survey released on Friday stated that achieving the estimated 6.75-7.5 per cent GDP growth would be difficult and more interest rate cuts would be essential to boost the economy. Addressing a gathering in New Delhi on Friday, Chief Economic Advisor Arvind Subramanian lauded the Goods and Services Tax and termed it as an ‘astonishing feat of administration, politics, and technology’. Assuring that inflation would be kept under check, Subramanian said, “By the end of march inflation will be well within the target.”
However, he also rued about the exclusion of health and education from the purview of GST. “Keeping health and education completely out is inconsistent with equity because these are services consumed disproportionately by the rich. Moreover, the tax on gold and jewellery products items — that are disproportionately consumed by the very rich -— at 3 per cent is still low,” the Survey said.
Subramanian also said that in the past, the Centre had little data on small manufacturers and consumption, while states had little data on the activities of local firms outside their borders but under the GST, there will be seamless flow and availability of a common set of data to both the Centre and states, making direct tax collections more effective.
The Economic Survey, which has been tabled in the Lok Sabha, stated that the availability of a common set of data to both the Centre and states post-GST will make direct tax collections more effective.
The Economic Survey also informs the government to bring electricity under the GST framework as it would enhance the competitiveness of Indian industry as taxes generated on power get embedded in manufacturers’ costs, which can later be claimed as input tax credit.
Speaking on government’s demonetisation initiative last year, he also mentioned that almost “5.4 lakh new tax payers have been included post demonetisation”. He also clearly stated that the Centre won’t relax fiscal borrowing to different states even as he directed states to cut short their expenditure and raise the taxes, in order to avoid economic deflation.