Farm goods, services to be dearer; GDP to gain: GST task force

Last Updated: Wednesday, December 16, 2009 - 20:40

New Delhi: Introduction of GST would help
attain higher GDP growth and pull down prices of manufactured
items, but would make farm goods and services expensive, the
13th Finance Commission Task Force on Goods and Services Tax
(GST) said here today.

"Prices of agricultural commodities and services are
expected to rise," said the report of the GST task force.

"The prices of agricultural goods would increase between
0.61 and 1.18 per cent, whereas the overall prices of all
the manufacturing sector would decline between 1.22 and 2.53
per cent," the report added.

Food prices have been relentlessly rising and was over 19
per cent year-on-year in the last week of November.

The switchover to the GST regime from the current tax
system would help better allocation of resources and a higher
GDP growth.

"The existing tax system introduces myriad distortions
which favour some goods and services at the expense of others.
These distortions yield inefficient resource allocation and
consequently, inferior GDP growth," it said.

The problem of the current tax system could be removed
with the switchover to the new tax regime under GST, it said.

Citing economic think-tank NCAER`s study, prepared for
the Commission, the report said, "implementation of the GST
across goods and services is expected ...to provide gains to
GDP somewhere within a range of 0.9 to 1.7 per cent."

The corresponding change in absolute values of GDP over
2008-09 is expected to be between Rs 42,789 crore and Rs
83,899 crore, it said.

PTI



First Published: Wednesday, December 16, 2009 - 20:40

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