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Thursday, December 15, 2016
Keep real estate, electricity charges within GST: CEA
CEA Arvind Subramanian
Arvind Subramanian says the Indian economy, as far as macroeconomic condition is concerned, is very stable.
As the country comes to terms with the demonetisation of Rs. 1,000
and old Rs. 500 notes, Chief Economic Adviser Arvind Subramanian spoke
at an ASSOCHAM event.
Excerpts from the press conference
>> It's fair to say that the Indian economy, as far as macroeconomic condition is concerned, is very stable.
the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) have
come down. Current account deficit is very low and is being financed by
Foreign Direct Investment. We have been reducing the fiscal deficit
>> From the domestic point of
view, there are many legislative achievements in 2016. Aadhaar Bill is
very important for the Jan Dhan Yojana, Aadhaar, Mobile numbers (JAM)
>> Legislation has been passed to institutionalise monetary policy.
bankruptcy code is very important in enabling exit from operating in
India. Entry has become very easy, but exit is still a problem.
>>GST constitutional amendment bill is the 'mother of all achievements'.
>>FDI policy has been liberalised considerably. FDI surged in Q2, which is a very encouraging sign.
>>Domestic challenges: how to manage demonetisation over the next weeks/months until remonetisation can be done fully.
>>Then there is the twin balance sheet problem of the corporates and the banks.
challenges: US interest rate rising and dollar getting stronger. But I
am less concerned about this since the Indian economy is still strong
>>The other challenge is to keep an eye on the currency situation in South East Asian countries and in China.
international challenge is that if we need strong growth, then exports
have to grow 15-20% every year. But the question is, can the advanced
economies buy our exports? Can they handle service exports from us?
>>GST: We should aspire to simple, clean rates that are lower rather than higher. This will help in fight against black money.
of land and real estate need to be part of GST. That way the input tax
credits can enter the system. Stamp duty can be kept separate.
>>Need to bring electricity charges as part of GST.
>>Manufacturing push: if China did manufacturing for 25 years, why can't we do services for 25 years?
Fed rate hike: it was anticipated and expected. The Indian economy is
very well cushioned to handle it. The RBI took the possibility into
account during its latest review.
oil prices: don't focus on the ups and downs. When oil prices go up,
nimble producers will also increase production. Don't think oil prices
will surge to a level that the Indian economy can't handle.