Hyderabad: The Government needs to focus on fixing the GST and not resort to further increasing the import duties in the road to economic recovery post-Covid, according to Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission of India.
Speaking in a virtual session on ‘The India story: How it was achieved and what to do now,’ organised by Manthan, Ahluwalia said GST was first thought by the UPA around 2006 or so but it could not be implemented. He said that it is BJP’s credit that GST was implemented. However, the multi-tier tax system and the associated process has made it very complex.
“To fix the GST system, do not rely on the revenue department, which has been working on it so far. Their point of view is related to revenues only. Get some world experts to tell what needs to be corrected,” he said.
He stressed the need for Government setting up red teams. These teams have mandate to study an issue critically and give feedback to the Government on the possible things that could go wrong and the steps to keep them under control. “Not all will get all things right all the time. There is a need for an internal critic,” he said. Also, it was not possible for PMO or the respective ministries to keep a tab on all the allocations and instead they should focus on the outcomes of four to six big issues.
On the banking system, he said there is liquidity but the lending is not happening correspondingly. The growth rate has slumped to 4.2 per cent due to the pandemic. There will be a big growth in the first quarter in the next financial year. This would be possible because of the lower growth rate the previous year. The coming financial year will be about recovery and the actual growth must be measured the next financial year and the role of banks will be critical in this phase, he said.
In the conversation, moderated by former RBI Governor Duvvuri Subbarao, Ahluwalia also said raising the import duties further, in a bid to give a fillip to domestic industry, will not help India’s trade segment.
On the ongoing farmer protests, Ahluwalia said broader discussions should have been taken up with stakeholders before forming the farm laws. Many have a feeling that the reforms have been rushed and the main aim of these reforms is to get rid of MSPs and mandis. This may not be the intention of the Government but these should have been included in the discussions to tell that.