Union Finance Minister Nirmala Sitharaman, on Sunday, said “periodic changes” in GST rates should be avoided and hinted at the need for rate rationalisation exercise to be undertaken once a year.

Periodic changes in rates bring about uncertainty both for the industry and the government.

Currently, the review of GST rates takes place once every three months at the GST Council meeting.

“Periodically changing rates bring uncertainty and also creates a ripple effect on businesses as they cannot ascertain how much to keep aside for the whole year. Government also does not know how much revenue would come in. So, we literally not formally propose to GST Council to consider a situation where rate rationalisation can be done only once a year,” Sitharaman said addressing a press conference on Budget 2020-21.

Boosting credit growth

The Finance Ministry is “closely monitoring” credit growth, particularly for retail sector so as to boost consumption.

“Lending, particularly lending for retail by banks, both public and private sector, is an issue that we are closely monitoring. The Finance Secretary has been continuously engaging with banks,” she said.

According to Sitharaman, the constant engagement with banks and NBFCs encouraging them to boost credit growth has helped disburse close to ₹4 lakh crore worth retail advances across 400 districts during the festival season starting Dussehra this year.

“Post that we have been following it up….. NBFCs are being given quite a few facility so that they can have greater liquidity…… So all steps are being taken so that liquidity is not an issue.,” she pointed out.

$5-trillion economy

The Budget 2020-21 has laid the foundation for increasing consumption, and ensuring that capex and government investment goes towards spending or building of assets such as infrastructure.

This is likely to have a “cascading effect” both in the short term and long term, Sitharaman said.

The measures will also lead to the virtuous cycle of triggering the economy to perform and move forward and that has been basis on which the government has based its decision to put a majority of its investment toward infrastructure construction.

“The government is also making sure (that the economy is on the growth path) that through various windows whether at directly paying to the farmer or improving on their health or looking at aspirational districts and making sure that infrastructure related to health, hospital, etc is there…….. so I expect all this to lead towards building of $5-trillion economy,” she added.

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