Benefits of GST for Indian economy

I had posted a while back on India’s goods and service tax. In that post I had pointed to a primer and a speech from Dr Kelkar. In that speech Dr Kelkar had estimated the gains of GST for Indian economy based on similar gains made in Canada.

In his recent speech (not recent actually, given in October 2009) he adds:

The Finance Commission had appointed a Task Force on GST as well as commissioned a study by NCAER to assess its impact on growth in GDP and exports. The preliminary results of the NCAER study indicate that the growth in GDP can be between 2-2.5 per cent with the implementation of a well designed GST. This pioneering study explores the impact of GST on growth through direct cost reduction as well as cost reduction of capital inputs. The increase in exports can be between 10-14 percent. If we use 3 per cent as a discount rate, and lower estimate of the GDP increase of 2 per cent accruing year after year, the net present value of the GST reform exceeds half a trillion dollars.

This is pretty much the amount he had estimated using Canadian estimates as well. The report is still not out. Atleast I couldn’t find it.

He then addresses issues he has discussed in previous speeches as well. Those who did not read earlier speeches can do a quick read.

The economics of  GST is fairly good but politics …well it is another story altogether.


4 Responses to “Benefits of GST for Indian economy”

  1. Benefits of GST for Indian economy « Mostly Economics PV online Says:

    […] original post here: Benefits of GST for Indian economy « Mostly Economics By admin | category: present value | tags: accruing-year, after-year, discount-rate, gdp, […]

  2. Goods and Services Tax – Finance Commission Reports « Mostly Economics Says:

    […] Second is a Fin-Com NCAER report which assesses the impact of GST on Indian economy. It assesses impact on economic growth and international trade; changes in rewards to the factors of production; and output, prices, capital, employment, efficiency and international trade at the sectoral level. The findings of the report were partly discussed by Mr Kelkar in his speech. […]


    what is beenefit to consumers? will it reduce price? does State Governments still have say on TAX rates? will it reduce tax rates on goods – for 1) Electronic items 2) Food and Read to eat products

    Its impact on Luxury and Durable good …

  4. Annu Says:

    The benefits are not for common people.

Leave a Reply to Annu Cancel reply

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