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Rationalise GST now

Counteract coronavirus supply shock with tax reform

Goods and Services Tax | Coronavirus | taxpayers

Business Standard Editorial Comment 

The likelihood that the novel will cause a significant supply shock to the Indian economy — as well as a rippling demand shock from sectoral hits to some employment-intensive industries — will increase the pressure on the government to pump up the economy. In this context, as things stand today, the government should avoid a stimulus package that would not make any significant difference to a supply shock. Not only would a big stimulus package such as the one designed in 2008-09 at the time of the global financial crisis not address the specific problem that the economy is facing in 2020, but the government’s fiscal position is also far from secure. It has already missed its fiscal deficit target by 50 basis points. However, there is still scope for action. In particular, it can move forward with rationalising (GST). This would act as a positive shock to supply and might go some way in counteracting the effects of COVID-19.



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First Published: Wed, March 18 2020. 00:39 IST