Implementation of goods and services tax will help
narrow fiscal deficit: CRISIL
Implementation of goods and services (GST) tax could
help government raise tax revenues and reduce fiscal
deficit, which has been around 4.5 per cent in the
last three years, a CRISILBSE 2.51 % report said.
Fiscal deficit, the gap between government's
expenditure and revenue, stood at 4.5 per cent in
FY14, lower than 4.9 per cent in FY13.
"To sustainably reduce fiscal deficit from current
levels, the government will have to rely on raising
revenues as a share of GDP," the report said.
"The government has to implement structural tax
reforms such as the goods and services tax (GST),
which will lift the government's tax revenues, lower
the cost of doing business and boost growth," it
said.
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By eliminating the cascading effect of multiple
central and state taxes, GST would reduce the cost
of doing business and increase profitability, which
in turn, would attract investments and ultimately
help GDP growth, the report said. However, the
agency felt that implementation of GST during this
financial year is unlikely and therefore forecasts
fiscal deficit to stay high at 4.3 per cent of the
GDP. The government would have to accommodate large
rollover of subsidies from the last fiscal which is
estimated at Rs 650 billion or 25 per cent of the
recognised subsidies in FY14, as well as raise
capital expenditure or spend productively to bolster
growth, it added. The agency said that a below
normal monsoon could lead to lower GDP growth of 5.5
per cent in FY15 than its base case estimate of 6
per cent, but it would not change its FY15 fiscal
deficit forecast.
Source: The Economics Times, India, dated
23/06/2014... |
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