Shri M.Venkaiah Naidu, Vice - President of India said that  the introduction of GST, the biggest ever tax reform taken since Independence has changed the face of the indirect tax regime in the country as it imposes one tax instead of several taxes by various State Governments and the Union Government. GST has made compliance easy for businesses and traders and will lead to further improvement in the ease of doing business in India.

 

      Shri Venkaiah Naidu inaugurated a two-day national seminar on “Contemporary issues and challenges in Finance, marketing and taxation “, organized by Keshav Memorial Institute of Commerce and Science and Indian Council for Social Science Research(ICSSR), here today. He said  Post-independence, India’s economic growth remained low for several years and was described as “Hindu rate of growth”. Following liberalization in the 90s, India’s economic growth picked up momentum and the country emerged as the fastest growing large economy. India’s GDP has grown at 8.9 per cent CAGR (compounded annual growth rate) in real terms since 1991 – taking India from being a US$225 billion economy in 1991 to a more than US$ 2 trillion economy now.

 

While the first major economic reforms were initiated by the P V Narasimha Rao government, the second sweeping reforms were introduced by Shri Vajpayee and the third set of reforms initiated by the present government are drastically transforming the Indian economy.

 

External agencies like the World Bank and IMF have projected India’s growth rate to be 7.3 per cent in 2018. India is projected to become the third largest economy in the next 10-15 years. A massive recapitalization of the public sector banks at Rs.2.11 lakh crore is expected to improve credit growth and private sector investment. The other major reform of Insolvency and Bankruptcy Code, 2016 has strengthened the rights of the creditors.

 

The infrastructure build out has been very rapid-- 24X7 electricity for all, massive increase in road construction across both rural and urban India, opening up of more than 50 airports and heliports in India as part of the UDAN scheme (up from 75 operational airports when the government came in) will boost the economy in the long run.

 

         The Vice- President said that the expanding middle class will be the key driver of India’s economic growth in the coming years. With the a large population of India, about 65 per cent remaining under 35 years, the need of the hour of is to take full advantage of this demographic numbers by creating adequate job opportunities for the young population. We have to provide the students,  skills not only to earn livelihood but life skills that will enable them to deal effectively with any situation, he said.

 

        Shri Naidu said that external agencies like the World Bank and IMF have projected India’s growth rate to be 7.3 per cent in 2018, India is projected to become the third largest economy in the next 10-15 years. A massive recapitalization of the public sector banks at Rs.2.11 lakh crore is expected to improve credit growth and private sector investment. The other major reform of Insolvency and Bankruptcy Code, 2016 has strengthened the rights of the creditors.

 

      The Vice-President said that every citizen must consider it as his sacred duty to pay taxes as development and welfare measures would suffer if governments do not get adequate revenues. In fact, one of the major objectives of both demonetization and GST is to increase tax compliance. Expansion of formal economy will naturally lead to increased tax collections and higher revenues to the government, which in turn will be used to accelerate development—building roads, schools, hospitals and other essential infrastructure.

 

       India’s tax-to-GDP ratio is 16.6 per cent in FY2017, which compares with 26.0 per cent in the USA, 20.1 per cent in China, and 34.3 per cent in OECD countries. India needs to significantly ramp up its tax-toGDP ratio to fund a modern 21st century government which can offer basic public goods and social security to its citizens. Direct tax collected in FY2018YTD has grown at 18.2 per cent. This increase in collection has been driven by increase in compliances with the number of taxpayers increasing for both direct and indirect taxes. 5.9 million tax-payers have registered for GST and 28.2 million people filed their income-tax returns for FY2017. Demonetization, SIT on black money and notification of the Benami Transactions Act, 1988 are some of the strong steps taken to bring more economic activity into the tax net, even as the war on black money needs to continue unabated, he added.

 

       The Vice- President further said that, economic growth and reforms have created a large consuming class of citizens in India who now have consumption patterns very similar to the best in the world. Around 50-100 million people in India have broken out into the ranks of the global consuming class.

 

        There is an aspiring class of 200-300 million middle-class Indians. Another class of 500-600 million people is now breaking out of the poverty and graduating from cycles to motor cycles and mobiles. India has hence seen significant interest from foreign firms to invest FDI to serve this market.

 

Implementation of new tax reforms, raising commodities prices and uncertain global economic environment are expected to have a bearing on the Indian economy.In the wake of these changes and challenges, the academic institutions need to make their curriculum relevant to the contemporary needs of the society, Shri Naidu added.

 

 

 

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