GST Rates Beneficial, Will Trigger Demand, Boost GDP, Says Adi Godrej

New Delhi: Prominent industrialist Adi Godrej today allayed fears of price rise after the implementation of the Centre's flagship Goods and Services Tax, saying the tax slabs have been placed so reasonably, that the overall effect will be "extremely beneficial". Hailing GST as the biggest economic reform since the liberalisation of 1991, he said it would, in the long run, make India a "very fast growing economy".

The big thing about GST, Mr Godrej told NDTV in an exclusive interview, is that it can be "extremely beneficial if the rates are reasonable, as now they are". That will create "strong GDP growth, strong demand, and therefore stronger consumption will lead to stronger investment and therefore stronger benefit".

The concerns about GST, he added, are exaggerated by people "who don't understand the issue very well".

Price rise has been one of the key criticisms of the opposition and a recurring concern for a section of traders, who fear loss of business if the tax is passed onto the consumer.

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From Congress to Trinamool Congress chief and Bengal Chief Minister Mamata Banerjee, most opposition parties have flagged the matter. The Congress had been opposed to the four-tier tax system, saying any tax above 18 per cent will hit consumer interests.

Today, Delhi deputy chief minister Manish Sisodia took a dig at the BJP, saying politicians do not need to celebrate GST launch, if the people were happy, they would celebrate. Indicating that was unlikely, he said, "for the first time since Independence" clothes, slippers and fans, tiles are being taxed at 28 per cent".

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While drawing up the GST - dubbed as the biggest tax reform since Independence -- the government had taken the opposition and the state governments on board. Still, this is only a beginning, said top economist and Central think tank member Bibek Debroy. Most countries, he said, perfected similar tax regimes over a few years and in India too, the GST Council will make tweaks in the days to come.

The single tax system, which will replace a quagmire of nearly a dozen central and state taxes that hobble business and strike fear among foreign investors, is divided into four broad tax categories. The slabs are of 5, 12, 18 and 28 per cent, and various exceptions.