GST to create common Indian market, complement demonetisation process: Economic Survey

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The Goods and Services Tax passed by the Parliament last year will create a common Indian market, improve tax compliance and governance and boost investment and growth. Moreover, it will also complement the demoneitsation process, according the Economic Survey 2016-17. The Survey hails GST and Demonetisation as “two major domestic policy developments” of last year. It also says that GST is a “bold new experiment in the governance of India’s cooperative federalism.”

While noting that demonetisation has had short-term costs but holds the potential for long-term gains, the Survey says that some follow-up actions to maximize the benefits of note-ban include — “fast, demand-driven, remonetisation; tax reforms, including bringing land and real estate into the GST, reducing tax rates and stamp duties; and acting to allay anxieties about over-zealous tax administration.”

The Survey says these would allow “growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17.”

Talking about the World Economy, the Survey says global GDP would expectedly increase because of a fiscal stimulus in the US. However, there are “considerable risks” such as higher oil prices, eruption of trade tensions from sharp currency movements, especially the Chinese yuan, and geo-political factors. The Survey also notes an upsurge in protectionism may affect India’s exports in the medium term.

Union Finance Minister Arun Jaitley tabled the Economic Survey in Parliament today.

Earlier in the day, President Pranab Mukherjee inaugurated the Budget session of Parliament, while Prime Minister Narendra Modi expressed hope there would be good discussion over the budget by political parties and which would be used for forwarding people-friendly development measures.

“Yet another new tradition comes into effect from today. Budget is being presented one month ahead and the rail Budget has now become a part of the Union Budget,” PM Modi told reporters ahead of the inauguration of Budget session.

“There will be extensive debate in the Parliament on this issue and it will also reflect the ensuing benefits from the decision in the days to come. I am optimistic that all political parties will join hands to ensure a healthy debate in the Parliament in the larger public interest,” he added.

In his address to the joint session of Parliament, President Mukherjee hailed Modi government’s development initiatives and its efforts to fight against corruption and black money.

Breaking from the past Budget practices, Modi government has advanced the dates of presentation of Economic Survey and the Union Budget by a month. Moreover, the practice of presenting a separate Railway Budget has also been done away with and merged with the Union Budget. While Economic Survey was tabled in the parliament today, the Union Budget would be tabled tomorrow.

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