India Inc has backed Union Finance Minister Arun Jaitley’s call for bringing in an ‘undistorted’ goods and services tax (GST) regime, even going to the extent of saying that it’s better not to move to GST altogether if it involved making a compromise on its structure.
“I have no doubt that we can attain 9 per cent growth in the economy by 2018-19, if political parties can rise above their differences and help ring in the new indirect tax regime that has been in the making for over a decade,” said Sunil Kanoria, vice-chairman of Srei Infrastructure who has just taken charge as the president of industry chamber Assocham.
“GST can help kick start our economy… we are bolstering connectivity infrastructure like highways, railways and digital, but doing business between States remains a nightmare and 4.5 lakh SMEs particularly suffer on this account,” he said, stressing that global investors also consider it a critical element in the ease of doing business — a parameter on which the Modi government is trying to improve India’s abysmal standing.
He however underlined that industry is not in favour of the 1 per cent inter-State cascading sales tax to be imposed over the GST in order to compensate manufacturing States for a possible loss of revenue.
“We should be moving towards a united India rather than dividing states, so there should be a single rate and the 18 per cent GST rate that the finance ministry seems to be considering is reasonable,” the Assocham president said, adding that the GST shouldn’t be creating new problems.
“If the GST regime is going to be distorted in any form, it would be better it doesn’t come at all,” he asserted, adding that industry captains will engage with parliamentarians of all hues to pursue the April 2016 roll-out of GST.
On Tuesday, Mr Jaitley had said that the suggestions made by the Congress to amend the GST structure were “preposterous” and would impose a defective GST regime on the country. The government is hoping to get the GST Constitutional Amendment Bill passed in the winter session of Parliament.
Mr. Kanoria said revival of private investment would take some more time as the poor governance from 2010 to 2014 put many businesses under severe stress, but he sensed a visible revival in the infrastructure sector over the past two months.
“As an infrastructure financier, I can tell you that I have noticed a significant mobilisation of people and equipment at several infra project sites in the past two months,” he said.
The government’s efforts to improve the business regulatory environment and give entrepreneurs the confidence to invest fresh capital, would start showing results by 2017-18, following a marginal improvement in growth and investments in 2016-17, the Assocham chief said.
Mr. Kanoria conceded that Indian industry has not been able to have a regular audience with Prime Minister Narendra Modi as the NDA government has not reconstituted the PM’s Council on Trade and Industry and other such fora that met periodically. “Maybe the PM first wants to focus on attracting global capital to India as he is excellent at marketing the country. We would certainly hope for more interactions with him going forward,” he said.
Assocham also suggested that fast-track dispute resolution strategies be deployed to free up around Rs. 4 lakh crore of infrastructure projects that are stuck in arbitration or litigation between the government and private players.