Today's ET editorial ( http://epaperbeta.timesofindia.com/Article.aspx?eid=31815&articlexml=Go-for-a-Single-GST-Rate-of-About-03102017014017 ) suggests that government should adopt a single rate of 14% for GST.
This set me thinking. India is an investment driven economy. Capital Formation with private and public investments determines the growth in the economy. For the past few years, private investments have dried up leading to lower than targetted or potential growth.
When BJP came to power, all of us had a great hope that the economy will revive. BJP's economic policies will be directed towards high growth and away from entitlement economics. However, Rahul Gandhi's "suit boot ki sarkar" jibe seems to have made BJP cautious and sympathetic towards entitlement/socialist economics. The result of this cautiousness is that BJP has wasted a golden opportunity to convert India from an investment driven economy to consumption driven economy. With the implementation of GST, BJP could have seized the initiative and set a single reasonable rate of GST. Instead, in order to cater to the socialists, it has 4 rates of GST plus luxury/sin surcharges resulting in a complicated system.
Consumption is viewed as evil by government but if you want high growth, high consumption is essential. Due to socialist mindset, goods have been divided into essential and luxury and attempt is to tax luxury at ridiculous rates. Is the government missing that people have aspirations? India is a young country and youngsters like good things in life. It would have been a stupendous opportunity for the government to cater to this young crowd, have a single rate of GST and encourage consumption of even luxury goods.
The Prime Minister has pushed through the bullet train program inspite of all opposition and lot of sarcasm/criticism. Consumption is not bad and getting the latest and best is to be encouraged. High price does not mean luxury. Quality comes at a price. So to tax a mercedes at a rate higher than maruti alto sends a message that government wants you to drive a maruti alto and not graduate to a Merc.
These are early days and government and GST council can and seize upon this opportunity by following advise given by ET editorial and set country on to high growth path and also encourage consumption of quality goods.
This set me thinking. India is an investment driven economy. Capital Formation with private and public investments determines the growth in the economy. For the past few years, private investments have dried up leading to lower than targetted or potential growth.
When BJP came to power, all of us had a great hope that the economy will revive. BJP's economic policies will be directed towards high growth and away from entitlement economics. However, Rahul Gandhi's "suit boot ki sarkar" jibe seems to have made BJP cautious and sympathetic towards entitlement/socialist economics. The result of this cautiousness is that BJP has wasted a golden opportunity to convert India from an investment driven economy to consumption driven economy. With the implementation of GST, BJP could have seized the initiative and set a single reasonable rate of GST. Instead, in order to cater to the socialists, it has 4 rates of GST plus luxury/sin surcharges resulting in a complicated system.
Consumption is viewed as evil by government but if you want high growth, high consumption is essential. Due to socialist mindset, goods have been divided into essential and luxury and attempt is to tax luxury at ridiculous rates. Is the government missing that people have aspirations? India is a young country and youngsters like good things in life. It would have been a stupendous opportunity for the government to cater to this young crowd, have a single rate of GST and encourage consumption of even luxury goods.
The Prime Minister has pushed through the bullet train program inspite of all opposition and lot of sarcasm/criticism. Consumption is not bad and getting the latest and best is to be encouraged. High price does not mean luxury. Quality comes at a price. So to tax a mercedes at a rate higher than maruti alto sends a message that government wants you to drive a maruti alto and not graduate to a Merc.
These are early days and government and GST council can and seize upon this opportunity by following advise given by ET editorial and set country on to high growth path and also encourage consumption of quality goods.
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