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Goods and service tax set to be biggest achievement of Modi government
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Tuesday, 23 May, 2017, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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With prime minister Narendra Modi about to complete three years in office,the biggest achievement of his government on the economic front would be goods and service tax (GST), which is near a roll-out. This was stated by the Associated Chambers of Commerce and Industry of India (Assocham).
It added that financial inclusion, digitisation and public investment on infrastructure like railways and power distribution were perceived as other credible steps for structural changes in the economy.
Based on a perception among its members, Assocham noted that benign inflation, both at the retail and wholesale levels, was among the other positives for the government.
Of course, the fall in inflation was supported by a sharp correction in international commodity prices and good monsoon in the last season.
As the price rise remained within the target of four per cent, set by the Reserve Bank of India (RBI), the apex bank was also able to keep the interest rates low. However, the credit off-take in the private sector still remains a challenge.
The prices of pulses, onions and other essential commodities, which used to hit the headlines, have come down significantly in the last 12-18 months.
“The implementation of GST in the next few weeks will cap the other major initiatives of the government,” stated Sandeep Jajodia, president, Assocham.
“The focus on improving ease of doing business, through measures like GST and other taxation reforms, has also been noted as one of the major achievements of the NDA government,” he added.
Clean-up of the subsidy disbursal, which had reached the proportion of a bottomless pit, is yet another achievement of the government, which is pursuing linkages of the Aadhaar card with every bank account holder.
Helped by a favourable crash in the crude oil prices, the elimination of subsidies on petrol and diesel and the significant reduction in other fuels, including cooking gas, have brought about a great deal of improvement in the balance sheets of the oil marketing companies.
Taking a look at other macros, the government deserves credit for the fact that India's foreign exchange reserves have touched an impressive high of $372 billion, giving a muscle to the rupee. While exporters have shown some concern, the strong rupee is helping tame inflation further.
Thanks to several measures to open up the foreign direct investment (FDI) regime in key areas, the country has received a record net FDI of $100 billion in the last three years, while foreign funds are pumping in huge liquidity in the stock market.
Riding on the ample liquidity and the confidence of global fund managers, India's market capitalisation has crossed a massive $2 trillion, so much so that some kind of caution is needed to handle such inflows.
While a high level of non-performing assets (NPA) remains an area of concern, the government has taken some decisive measures like empowering RBI to set up oversight committees and refer the toxic assets for insolvency and all these should help resolve the nagging problem.
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