“At this point of time when the macroeconomic risks like rebound in inflation both at the CPI and WPI barometers and continuing slowdown in the industrial growth along with global geo-political headwinds are rising, the passage of the GST Bill can be a strong anti-dote for any such negative new flow,” said ASSOCHAM.
The chamber said while the implementation of the law would still be far away since ratification of at least half of the State Assemblies would be required, the main hurdle remains in the Rajya Sabha where the composition of the House strength is fractured making it imperative for a wider political consensus on the issue.
The good part is that the Congress Party has been showing inclination to come on board.
“We appeal to the principal Opposition to leave aside its wider political difference with the government and support the most important tax reform for the country. The GST alone can add to the Gross Domestic Product by at least 1.5 percentage points. Moreover, the kind of sentiment lift it would create would be phenomenal for the global investors both in the financial markets as also the inflows through the foreign direct investment with the positive consequences on a whole lot of parameters like current account stability also reflected in the currency movement,” says ASSOCHAM.
It said while it is true that the Khariff harvest would be higher, along with better prospects for the Rabi crops because of abundant Monsoon this year, the inflation risks at present are evident in terms of a range of primary articles and manufactured food products.
Besides, hit by terror attacks and the economic uncertainties out of Brexit, the European economies including the UK do not present an encouraging picture.
The European markets and investment exchange is key for the Indian economy both for direct engagement and the overall sentimental impact on the global markets.
Further, in the run-up to the elections, the rhetoric for protectionism is expected to increase in the US, leaving a negative trend for the Indian IT companies, in particular.
“Risks from China and Japan remain high. Under these circumstances, India has to look inward for demand generation and the GST and other economic reforms are essential for the morale boost,” said D.S. Rawat.