Wednesday, July 05, 2017
Industry alone to add USD 280 billion to GDP from GST in 8-9 years: ASSOCHAM
New Delhi, 5 July 2017: Industry alone is expected to contribute USD 280 billion to India’s Gross Domestic Product (GDP) in the next 8-9 years, as a positive fall out of the Goods and Services Tax as structural changes in the ease of doing business would propel the growth, an ASSOCHAM-APAS study has said.
Describing the GST, in the short-term, as a “mini budget short of projection of estimated revenue,” the paper said most businesses would be able to get significantly more credits under GST, leading to a benefit for most of them.
“It will bring a systematic approach and enhance transparency which will aid growth of business and would help the industry to concentrate on its core business,” the paper said, adding “we believe that GST is a structural reform and is expected to accelerate the pace of GDP growth in India, despite implementation challenges in the near term. It would usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organised players”.
The ASSOCHAM Secretary General Mr D S Rawat said, one of the most visible benefits, accruing immediately from GST is removal of the octroi / chungi check posts at the inter-state borders, the most irritating and efficiency killing phenomenon that should have gone long ago. In any case, with most of the states, removing the major trade obstacle, immediately after the roll out of the GST, the ease of doing business would go up significantly and the operational efficiency would improve singularly from the removal of the border check posts at inter-state borders.
As the paper notes that industry would alone would bring accretion to the GDP by USD 280 billion by 2026. Combined with other vital sectors of the economy, the gains would be still higher, significantly.
Notwithstanding the teething troubles, the GST would make even the micro, small and medium enterprises (MSMEs) more efficient and confident, integrating them well into the mainstream of the economy. “Eventually, GST will turn these MSMEs more competitive with a level playing field between large enterprises and them. Furthermore, the Indian MSMEs would be able to compete with foreign competition coming from cheap cost centres such as China, the Philippines and Bangladesh”.
Among the other benefits to the industry and particularly the SMEs, they would find it easier to start the business and improvement in the market for the MSMEs. Besides the logistics overheads would be lower as the country-wide market becomes unified.
Just as GST would help the MSMEs, the newly started Insolvency and Bankruptcy Code (IBC) should put the non-productive assets into productive use, though the institutional infrastructure and capacity building to implement the IBC would be key.