The Goods and Services Tax (GST) enforced from July 1 in a midnight session of Parliament was a landmark event. Combined efforts of different political parties brought it about. It was for the greater common good. But it is not an end in itself. It is the beginning of a process of reform which is expected to rejig the economy. The intention is to compress multiple indirect taxes into a single tax that would simplify the complexity of multiplicity. It will also remove fiscal barriers between the states. These barriers impede transportation of goods and that encourages corruption. The previous system betrayed a fragmented structure of the national economic edifice. It is estimated that GST will contribute 1.5% of economic growth and accelerate it. The advent of GST was of course preceded by differences and compromises. Every state raised its own hassles so the focus now should be on stabilising the new tax system. A simple and efficient GST should lead to easier business transactions. Economic activity should brisk up. There should be greater job opportunities. And corruption plus tax evasion should be minimised.
The sector to benefit is manufacturing with ‘Make in India’ in focus. But that cannot be achieved without other necessary reforms. The stress should be on actualising GST. Industry should absorb the surplus from agriculture in the rural sector but that calls for speeding up of industrialisation which may run into numerous obstacles. Another imperative is eradication of the farm prices. All states should jointly make the resolve behind the measure a reality. At the same time, today’s pains for tomorrow’s gains should be smoothed out. For instance, the anticipated rise in the price of essential drugs should be taken care of. If the poor of this country are relieved of inflationary trends on account of the GST, then the exercise would have backfired! For now people are adopting the wait and watch policy!
