Towards greener GST

GST rate rationalisation and expansion must be done not only to achieve simplification but also to subserve large-scale employment and environmental policy goals, writes VS Krishnan

- VS Krishnan

After nearly eight years of the implementation of the goods and services tax (GST), make no mistake we can be truly proud of what we have achieved — a unified tax across the country and the removal of internal barriers to the movement of goods. Added to this is the creation of a technical platform for carrying out three business processes online — registration; payment of duty; and filing of returns. While these achievements are significant, we now need to simplify the GST rate structure and also inject further buoyancy in revenue growth by correcting the fall in the incidence of duty from 14.8 per cent in the pre-GST period to around 12 per cent now.

It is also suggested that this opportunity for rate rationalisation be used to achieve other economic goals such as boosting employment and reducing environmental pollution.

Today, if there is a problem weighing on policymakers, it is employment generation. There is now some consensus that the key to boosting employment lies in the growth of four labour-intensive manufacturing industries, namely textiles (from yarn to fabrics of both cotton and man-made fibre), leather and footwear, food processing, and toys.