ENS Economic Bureau
| New Delhi |
Updated: December 11, 2019 4:56:19 am
India’s GDP growth rate, at 4.5 per cent in Q22019-20, has hit a 26-quarter low, dragged down by a contraction in manufacturing, weak investment, and lower consumption demand.
The constant changes in goods and services tax (GST) have made compliance difficult for small businessmen while unpredictability of the tax law creates uncertainty, Fifteenth Finance Commission Chairman NK Singh said. The GST rate has been revised 38 times since its launch, leading to a clutter of taxes, Singh said at the launch of a book, “In Service of the Republic”, written by Former Finance Secretary Vijay Kelkar and economist Ajay Shah.
The book has argued that a single GST rate of 10 per cent applied to 70 per cent of India’s economy would have resulted in 7 per cent of GDP as tax revenue for the Centre and the states. “The right way to design the GST is a single rate, a low rate, a comprehensive base, with an elegantly simple administrative system,” the authors wrote in the book.
Others key themes highlighted in the book are the need to ensure higher growth for meeting various objectives and on the government’s doing market-linked fewer things while operating efficiently in critical areas to address market failure. “Given the present situation of our economy, growth is far more important than anything else in meeting various objectives,” Kelkar said at the panel discussion during the launch.
India’s GDP growth rate, at 4.5 per cent in Q22019-20, has hit a 26-quarter low, dragged down by a contraction in manufacturing, weak investment, and lower consumption demand. This is the lowest quarterly growth rate in the five-and-half years of the NDA government. Shah added the country should focus on sustained growth for a period of 30 years.
“India has come into middle income with a $3 trillion economy. We had great surge of growth from 1991 to 2001…the period after 2011 has seen a retreat from the optimism of 1991-2011. This is a cause for great concern. We have a finite window of opportunity with a young workforce. We must get rich before we get old,” the authors wrote.
“The pathway forward lies in doing less” but effectively, Shah said.
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