GST: Govt must focus on improving rural consumption and infra development projects

    The Centre should focus on improving the rural consumption, kickstart construction activity and push for more infrastructure creation for unleashing the animal spirits in the economy. The government should also monetise some of the real assets and invest in infrastructure projects that would have multiplier effect.

    Pratik Agarwal, Group CEO, Sterlite Power, said asset recycling through InvITs (infrastructure investment trusts) or REITS (real estate investment trusts) can be a major source of funding infrastructure projects in the country.

    In fact, some of the State governments are owning such wonderful power distribution assets and they can raise up to ₹1.5 lakh crore in a matter of few quarters, he said addressing BusinessLine pre-Budget event organised here on Friday.

    Reform in power sector

    Just like GST, the Budget should look at major reform in power distribution sector to minimise the loss for producers, he said.

    While foreign pension and insurance money are being invested in Indian infrastructure projects, the country’s pension funds are shying away from taking exposure in domestic infrastructure projects, Agarwal said at a panel discussion moderated by N Madhavan, Senior Associate Editor, BusinessLine.

    Vivek Bhatia, Managing Director and CEO, thyssenkrupp Industries India, said the government should focus on boosting exports so that the problem of low capacity utilisation gets resolved even while the domestic demand picks up. Though the focus on ‘Make in India’ had pushed exports in few sectors such as auto components, the larger concern is on capital goods and it is still lagging due to various reasons, he said.

    Once exports catch pace, private investments will start and in turn kick-start domestic consumption, he added.

    Tax rate on corporates

    Sudhir Kapadia, Partner & National Tax Leader, Ernst & Young LLP, said the tax rate on corporates is still very high if one combines the corporate tax and dividend distribution tax.

    The GST collection seems very low when compared to the government estimate but it should be quite normal if one compares it with the pre-GST era, he said.

    The problem is government makes unrealistic estimates across various revenue heads while presenting the Budget and repents when the tax collections fall short, he added.

    DK Joshi, Director and Chief Economist, Crisil, said the Budget should address concern on rural demand which has been hit severely due to the government focus on containing inflation. The economic recovery looks far as most of the measures taken by the government like cut in corporate tax and incentives for fresh investment will take longer time to translate into fresh investments, he added.

    Source- Business Line.

The post GST: Govt must focus on improving rural consumption and infra development projects appeared first on GST Station.



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