Promise of a benign GST

FM's intent to lower the rates inspires confidence as it is expected to create a positive output effect

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Finance Minister Nirmala Sitharaman has indicated that the Goods and Services Tax (GST) Council might not delay the much-awaited "rationalisation" of the rate slabs any longer, and stressed that what is in the offing is a "thorough review", particularly concerning the items of daily consumption. Importantly, she added that the intent of the exercise, which started three years ago, is to "have fewer and lower rates". This is indeed a welcome objective, and could give a consumption booster to the economy that is far bigger in magnitude and efficacy than the income tax (I-T) relief announced in the recent Budget.

A large part of the estimated I-T giveaways of ₹1 lakh crore would be used by indebted households to repay loans. Also, the reliefs might not lead to any incremental consumption by the rich and super-rich. A part of the funds forsaken by the exchequer may add to bank deposits as well.