The sale of land and real estate should be included in the Goods and Services Tax structure, Chief Economic Adviser Arvind Subramanian said on Thursday, adding that rates should be lower rather than higher as this would help the fight against black money.
The CEA, however, did not reply to questions regarding the government’s decision to demonetise high-value currency notes, only saying that the issue of how to manage the situation over the next few weeks and months would be challenging.
“The passage of the GST Constitutional Amendment Bill was the mother of all achievements,” Dr. Subramanian said while speaking at an Assocham event. “We should aspire to simple, clean rates that are lower rather than higher. The sale of land and real estate needs to be part of GST. That way the input tax credits can enter the system.” Dr. Subramanian added that electricity charges should also be included in GST.
“The other challenge is to keep an eye on the currency situation in South East Asia and in China,” he said. “The third international challenge is that if we need strong growth, then exports have to grow 15-20 per cent every year. But the question is, can advanced economies buy our exports? Can they handle our service exports?”
The CEA also highlighted two challenges the Indian economy would have to face domestically. “One will be how to manage demonetisation over the next weeks and months until remonetisation is done fully,” he said. “And the other is the ‘twin balance sheet problem’ of the corporates and banks.”
Dr. Subramanian said that the Indian economy was very stable, with both retail and wholesale price inflation having fallen from double-digit levels, the current account deficit being low and fiscal deficit consistently reducing.