Prices of agricultural items and services are expected to rise after implementation of the GST, although the overall inflationary impact of the proposed indirect tax regime will be negative, former Finance Commission Chairman Vijay Kelkar said.
Mr Kelkar told the Parliamentary Standing Committee scrutinising the GST Bill that while prices of agricultural commodities and services are expected to rise, most of the manufactured goods would be available at relatively low prices especially textiles and readymade garments.
The Standing Committee has submitted its report to Parliament. The GST Bill was introduced in August 2010 in the Lok Sabha.
“The prices of agricultural goods would increase between 0.61 per cent and 1.18 per cent whereas the overall prices of all manufacturing sector would decline between 1.22 per cent and 2.53 per cent,” Mr Kelkar said in a reply to the committee headed by senior BJP leader Yashwant Sinha.
Mr Kelkar further said the increase in agricultural prices would “benefit millions of farmers” and the urban poor will also benefit from new employment opportunities.
With regard to the food crops, he said, the poor would continue to “remain secured” through the public distribution system.
Mr Kelkar, who was chairman of the 13th Finance Committee, further said the prices of many other consumer goods, including, sugar, beverages, cotton textiles, wool, silk and textiles are expected to decline.
He added, however, that “overall inflationary 24 impact of GST will be negative through lower prices, lower fiscal deficit and higher output“.
He also told the panel that GST will positively impact the common man in many ways. The benefits listed include the overall economic growth leading to new job opportunities (about 20 million high end jobs over a period of time), bring down inflation if GST is levied at the combined rate of 12 per cent and improve governance.