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Singapore-headquartered DBS Bank expects full roll out of Goods and Services Tax (GST) system in India in the second half of fiscal 2017-18, said Radhika Rao, Economist (India) and Vice-President.
“For us April 1, 2017 deadline looks quite challenging. There is a long way ahead. Half of the State assemblies have to pass the Constitutional amendment Bill. State GST bills also have to be passed by State governments,” Rao told BusinessLine here after the Rajya Sabha nod to the Constitutional amendment Bill.
Describing the passage of the Bill as “ positive development”, Rao at the same time said the full implementation of GST will have negative impact on GDP growth in the first two quarters.
“Implications are going to be negative initially, in the short run: This bitter medicine (GST implementation) is necessary, but there will be short-term negative effect, particularly on inflation,” she added.
“If you see any economy that has taken up GST, you will see inflation has risen in the first year of implementation.”
Rao also said that she would wait for further clarity before deciding on any revision of the GDP growth forecast for India for 2017-18.
DBS Bank had in March this year projected GDP growth rate of 7.9 per cent for 2017-18. It had also pegged the India GDP growth for 2016-17 at 7.8 per cent.
Meanwhile, DBS Bank expects the Reserve Bank of India to keep policy rates unchanged at the upcoming monetary policy review on August 9.
Rao also saw the July Consumer Price Index — to be released in August — coming close to 6 per cent.
(This writer is in Singapore at the invitation of DBS Bank)
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