GST delay will hurt India’s GDP by 1.5%-2%

An early implementation of the GST would have helped India move on to a high growth path. Also, the impact of the GST will not be felt overnight. If GST is rolled out by April 2016 (which seems tough now), then its impact will be visible only in 2018

Industry and foreign investors seems to be losing their patience now. The unnecessary delay in Goods and Services Tax (GST) due to opposition’s rhetoric is hurting Indian economy more than the political party in power. The sad part is that the opposition parties do not understand this simple fact.

 
An early implementation of the GST would have helped India move on to a high growth path. Also, the impact of the GST will not be felt overnight. If GST is rolled out by April 2016 (which seems tough now), then its impact will be visible only in 2018. Hence quicker the rollout, better it is. There is no doubt about the success of GST. World over, it is the standard way of taxation. It unifies a complex tax system and since it is simpler to implement, it creates a broader tax base and efficient taxation too.
 
But GST alone will not help India. GST needs to be supported by other factors too that help increase GST benefits by acting as catalysts. Though factors like new Companies Act, electricity situation have improved, India’s economy is still waiting to see better days when it comes to showstoppers like getting construction permits, enforcing contracts, etc. If these factors are also taken care off and GST is rolled out in next year, then it will help give India the credibility it awaits and also help improve its business rankings.
 
GST is expected to increase government revenue too as with just one authority managing taxes, collections would go up and slippages will be lesser. It will also help poor states as tax will be charged on consumption basis and not manufacturing. This will bring much-needed revenues for poor states that did not earn much from taxing manufacturing sectors.
 
Economists have long been explaining the benefits of GST and how it can help India create more jobs, increase revenue as well as promote domestic manufacturing. But if opposition does not keep its political agenda aside, it will hurt the economy in long run and opposition can also be accused of not performing its duties.