Claiming GST Would Boost GDP Growth By 1-1.5% Is Rubbish: Bibek Debroy
NITI Aayog member Bibek Debroy on Friday said any suggestion that the Goods and Services Tax will boost India’s GDP growth by 1-1.5 percent is "utter rubbish".
Changes from the originally proposed "ideal" structure, has turned the current from of the new indirect tax regime into an "imperfect GST", Debroy said. This is both because of the country's federal structure as well as the multiple rate structure, he added.
"When you see figures floating around that there will be 1- 1.5 percent increase in GDP after implementation of GST. For God's sake, that is utter rubbish," Debroy said while speaking at a session during the GST Conclave organised by Hindi news channel Aaj Tak.
The 1.5 percent boost to GDP “was based on the model that the NCAER did in the course of the 13th Finance Commission’s report for an ideal GST. We are nowhere near that ideal GST, this is just the beginning of a process," he added.
The noted economist, however, quickly added that he will not "contradict" Finance Minister Arun Jaitley and Revenue Secretary Hasmukh Adhia who have maintained that GST will boost the country’s economic growth.
The number of countries with GST is not more than six or seven, even as some "rubbish" figures of about 140-160 countries having GST are floating around, he added.
Noting that despite the government’s good intentions, there may be plenty of administrative GST glitches, Debroy said, "Hopefully, glitches will lead to tweaking of the GST law." The NITI Aayog member said he would have preferred a single GST rate as multiple rates may create artificial barriers.
Talking about impact of GST on inflation, he said prices of manufacturing products may come down and those of services may go up.
The nationwide GST will be rolled out from midnight tonight, overhauling India's convoluted indirect taxation system and unifying the $2 trillion economy with 1.3 billion people into a single market.