GST rate should be higher if government wants to collect taxes: Dr Rathin Roy

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Pune, February 4, 2020: “The silent fiscal crisis has hit us owing to a shortfall in tax revenues, but the government was in denial. It has been unable to collect taxes due to a shortfall in corporate taxes, central excise, customs revenue and GST and this year the fiscal deficit has increased from 3.3 to 3.8 percent of GDP not to boost government spending but to make up for this tax shortfall. I suggest that GST rates should be higher if the government wants to collect taxes,” said Dr. Rathin Roy, Director, National Institute of Public Finance and Policy (NIPFP), Delhi.

He was speaking at a panel discussion on Union Budget 2020-21 organized by Pune International Centre (PIC) at Kale Hall, Gokhale Institute of Politics and Economics (GIPE), Deccan Gymkhana in presence of Prof. Pradeep Apte, Professor, GIPE, Dr. K.L Dhingra, Director, National Institute of Bank Management (NIBM) and Dr. Shubhashis Gangopadhyay, Research Director, India Development Foundation (IDF). The programme was chaired by Economist, Dr. Ajit Ranade. Dr Vijay Kelkar, VP, PIC and Prashant Girbane, Hon. Dir. PIC was present at the event.

“It was a contractionary budget as the government could not show how it was maintaining its expenditure levels,” said Roy.

Dr. Shubhashis Gangopadhyay said, “We talk about deficit but have no clue why we it needs to be in check. Investment to GDP ratio is rising and consumption on GDP ratio is falling and we talk about Purchasing Power Parity (PPP) in everything. Agricultural income was supposed to double in 2014 but we are still ‘working’ over it. Considering the education sector, lot of money goes to standalone institutes, which have no students below the age of 25 instead of government universities, where fund for research is desperately needed.”

Prof. Pradeep Apte stated, “The economic survey talks about non -productivity of several economic legislations and ease of doing business but ignores agriculture sector.”

“We were expecting stimulus package and revival of GDP from the budget. Everything is a part of the economy whether it is new-tax regime, affordable housing, education or MSME sector and the government has focused on most of these sectors especially the banking sector and NBFCs by giving them liberty and credit support. The government is also restructuring loans for MSME sector and trying to provide it with quest equity, which can increase the leveraging capacity of the sector,” said Dr. K.L Dhingra.

Dr Vijay Kelkar added, “There has been no quick-fix in the budget on how to handle the economic crisis. We have to admit that we are in ‘growth recession’ and it is a huge problem. We require macroeconomic adjustments and interconnecting measures to deal with the present crisis.”