The Reserve Bank of India (RBI) Deputy Governor, Subir Gokarn, on Friday, said that introduction of Goods and Services Tax (GST) would help contain price rise as the proposed common tax regime could take off the demand pressures from the market.
The GST could create the space for interest rates to come down and contribute to growth momentum, said Mr. Gokarn while addressing the Confederation of Indian Industry's (CII) Western Region annual regional meeting here.
The government would manage its finances effectively with the introduction of GST, said Mr. Gokarn, adding, it would help take off demand pressures contributing to inflation.
He said that India's high economic growth in the first decade of the new millennium was a result of “good policies and benign oil prices led to a virtuous circle of low inflation and micro economic changes that supported and sustained growth performance.”
Mr. Gokarn also said that growth in the telecom sector helped people stay connected, increase productivity, thereby accelerating growth.
Putting a note of caution he added, “Yet, today, the two factors of good global growth and benign oil prices no longer exist. This puts the onus of recreating high growth much more squarely on domestic factors. We can do these by managing inflation, capping of subsidies to make its framework reliable and predictable, bringing control of deficit into a rule-based framework, policy reform, fiscal consolidation, creating more capacity infrastructure and developing skills in people to take advantage of demographic dividend among other things.”
Adi Godrej, President-designate, CII, in his address said that despite the global crisis India continued to be one of the fastest growing economies in the world.
However, he noted that “for a country of our size, we need to have sustained double-digit growth if we are to provide productive and reasonably good quality of life for citizens.”
He said that addressing the challenges of governance was a key factor.
The corporate sector too had an important part to play in the process. “To achieve growth, we need good governance, good infrastructure and good people,” Mr. Godrej added.
