Indian Economy : A Detailed analysis of the Current Scenario: GST

June 15, 2017


               India is currently facing too many problems to handle . I would be discussing about Goods and Service Tax, the Farmer Suicide Problem , Reserve Bank of India's recent issues, the inflationary problems in our economy and finally about the job creation problems in our economy.
These problems have culminated in becoming a destructive force in the development agenda of our nation. Each word inscripted in this blog is done so after proper care and analysis , we try our best to devoid ourselves from committing errors and being centric in viewing the problems. But few influential discrepancies make us lean towards the "Left" or the "Right" . The continuation is as follows.

1. Goods and Service Tax :

                 The GST Bill or the 122nd amendment Bill,2014 is one of the ambitious tax reforms propagated by the BJP in our country . Is it really going to have a sudden , bolstering effect on our economy ? No , it clearly will not boost the economy over the night . The GST will have a drastic effect on the trade regime. Basically the taxes on necessary commodities will be reduced but luxury items will have to bear the costs of the opposite. 
The GST bill impact on basic necessities. 

                    Vehicles and cars will attract a total average cess of 30% (+/- 1%) , which is in fact a bit higher than the existing rates. Hotels charging a tariff below Rs.1000 will attract no tax whereas Non-AC hotels attract 12% tax and AC hotels attract 18% tax . VAT(Value Added Tax) that is levied by the state on the hotel industry within 5-20 % bracket  will either have a positive or negative effect depending on the state you dine in. Thus having a neutral effect nation-wide .
                    Accordingly after consulting many analysts , we at aadhimarg have compiled much data and arrived at a simple conclusion. GST will have little or in fact negative effect on the economy on the short run but will definitely have a positive effect on the economy in the long run . In earlier blogs I accede to the fact that we at Aadhimarg made quite a number of errors like the one where we predicted AAP as a national alternative ,  Demonetisation (The First Blog) being a block-buster move , where we ignored the presence of a political agenda behind the actual implementation . Although the move was a success it was not worth being inscripted in our economy .

The Prime Minister and the Financing Minister during the GST council discussion

                   The prices will never fall as claimed by the Government for no business person would reduce the existing costs instead he would be interested in making more profits instead. This is true because the main motive of an enterprise is to earn profits . Say, for example , I go to a hotel and eat food worth Rs.100 and according to the old rate I am charged with 18% tax i.e 118 will be the bill rate , but now with the new tax rate under G.S.T the total will be 105 . But no enterprise will want to lose that extra Rs.13. Hence, this will be the new profit for the firm. This proves the fact that the prices will not fall as claimed.               
                But then the government's income will definitely increase, thus helping in better spending on infrastructural improvements in our country. This will in turn improve the deteriorating state of Infrastructure in our country . It will drastically reduce corruption and improve the overall score of our country's performance in the world's growing agenda of 'Development' . Recent tax rate reductions will also improve the customer satisfaction around the country . The tax rate cuts also seem positive in the current scenario .  

I never expected G.S.T to occupy this lot a space . The link for the continuation

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