Armed with the firepower from the poll victory in four states, the BJP government is well poised to push through crucial reforms in the penultimate financial year of its second term at the Centre.
While privatisation and asset monetisation are among key priorities in the coming months to boost revenues to finance welfare schemes, four crucial votes in the GST Council — from UP, Uttarakhand, Manipur and Goa — will help it navigate a revamp of the indirect tax system five years after rollout.
With the compensation to make good the losses during the first five years due to end in June, states have little choice but to agree to raising rates and doing away with exemptions for certain goods and services, issues which are being deliberated by a group of ministers that will submit its report shortly.
As part of the formula, the government had assured 14% growth in revenue, and to compensate states through cess on several products, to cover any shortfall.
Raising resources is crucial in the coming months as taxes, both central excise and VAT, will decline during the current financial year. Besides, the Ukraine crisis has pushed up commodity prices, necessitating government intervention for edible oil, petrol and diesel.
“The results of the state elections could provide a pivot for policy continuity and stability, a crucial harbinger of future growth prospects.
Coupled with this, it seems that the current geopolitical conflict could finally see light at the end of the tunnel with positive signs of thaws. . .It is now important to put on the policy pedal to accelerate the growth prospects further,” said Soumya Kanti Ghosh, group chief economic adviser at SBI.