Finance Minister Speaks Exclusively: "Reductions in GST Will Impact Every Citizen" | Comprehensive Interview
The Indian economy is set for a significant shift, as the government implements a series of economic reforms, with the reduction of GST rates at the forefront. Finance Minister Nirmala Sitharaman has announced that she will personally monitor the impact of these changes from September 22.
According to economic experts such as Nilesh Shah, Managing Director of Kotak Mahindra Asset Management, and Saurabh Agarwal, Partner and Automotive Tax Leader at EY India, the GST announcement is expected to have a more profound and lasting effect on the economy than the official estimates. The experts believe that the reforms will lower inflation, boost growth, strengthen consumer confidence, and improve business capabilities beyond the projected figures.
The GST rate cuts are expected to stimulate consumer spending, leading to an increase in demand. This, in turn, will tempt industries to increase their production capacity, and new investments will follow suit. More investments will lead to more jobs being created, and more people will get money in their hands, starting a virtuous cycle.
The Reserve Bank of India (RBI) has also announced that it will open up the window for releasing more money into the economy. This move is expected to further bolster the economy and aid in the recovery from the impact of the COVID-19 pandemic.
The Finance Minister has stated that many companies have come forward to say they will transmit the benefits of the GST rate cuts to consumers. However, she has also made it clear that they will wait and see who's not passing on the benefits before taking action. She will engage with those who have not passed on the benefits to consumers.
The government is also working on extending liquidity or credit guarantee support to the US tariff-hit sectors. This move is aimed at protecting domestic industries from the potential adverse effects of the ongoing trade tensions.
However, not everyone is optimistic about the GST rate cuts. Some states are worried that after the sweeping GST reductions, they may not have the required revenue. The compensation cess, which was meant to provide guaranteed revenue to states in the initial five years, cannot continue and has been explained to all in the GST council very clearly.
Despite these concerns, the Finance Minister remains optimistic about the net revenue loss of approximately 48,000 crore due to the GST reforms. She believes that this loss should get offset in the current financial year itself.
The Finance Minister will also have a review meeting with banks next week to discuss the average lending rate in the banking sector. This move is part of the government's efforts to ensure that the benefits of the GST rate cuts and other economic reforms trickle down to the common man.
In conclusion, the GST reforms and other economic measures are expected to have a sweeping effect on GDP growth, consumption, ease of doing business, and the lives of each and every person in the country. The Finance Minister has reiterated that these reforms are never a secondary issue for the government and that they will continue to push for policies that drive growth and development.
