Let us talk about the GST collections. GST – from here on — would become important for markets both bond as well as the currency markets.
There are two concerns – one is in terms of the processes or the systems in terms of compliance for the various players and the second, in terms of likely collections. If you look at the collection for 2017-18, it fell slightly short of what was actually the revised numbers in the budget. Both these two factors make it important. Therefore, this May 4th meeting will be influencing the markets in quite a significant manner.
What about your views on the overall simplification of GST? It seems to be on the agenda of the 4th May meeting regarding the same in order to simplify the returns. What in your opinion needs to be done?
Things are moving in the right direction but any new thing takes time to stabilise. They were thinking that it should take at least a year for things to stabilise and considering that we started off in July 2017, one should hope that after the first quarter of this financial year things should be much better placed.
But the whole issue is of course concerns the smaller players more rather than the larger players and that has been the challenge for implementation of GST in the country. Smaller players are talking of their own tax credits which are coming in on time and that is what is going to be addressed in this particular meeting on May 4.th
Since it gets all the states also on board, it will be quite useful to see what is going to be the outcome. It is going to be significantly different from what was there earlier and whether the tax payerss grievances had met in terms of compliance.
Do you think that the collection numbers would be important? This should see a pickup otherwise there could be a worry going ahead?
Absolutely. The collections need to pick up because the entire system of GST is based on the premise that it would be revenue neutral. So, what was being gathered prior to GST is something which has to be garnered because there is a strong case for having a major challenge in terms of balancing the budget.
Since commodities are a major source of revenue, GST becomes very important and it also holds for the centre because they are talking of a very tightly packet budget where any kind of slippages on the revenue side is going to get reflected in a fiscal deficit number. Therefore, it is very important that the collections coming from GST remain optimal and it needs to move forwards as soon as possible. It should in place by June of this year.
Is crude also an important factor now?
It should be, but I am not quite sure if crude is going to be a part of the discussion.
Right now, what has happened is that with fuel products being out of the GST ambit, it has been a very good revenue earner. As and when the crude oil price goes up and the fuel products go up automatically, there is revenue to be earned by both the states and the centre. So, this would be a major issue again but in case crude oil prices starts moving downwards, which we do not really expect, then it would definitely impact the collections out there which means that the GST and other commodities will have to compensate.