Niti Ayog member Bibek Debroy refuses to buy ‘GST would boost GDP’ theory

Niti Aayog member Bibek Debroy said on Friday any suggestion that GST would boost GDP growth by 1-1.5% was "utter rubbish", adding that the current form of the regime was "imperfect" following alterations in the "ideal structure" originally proposed, according to PTI news report .

The noted economist, however, quickly added that he will not "contradict" finance minister Arun Jaitley and revenue secretary Hasmukh Adhia, when pointed out that they have been maintaining a similar boost to the GDP from the GST regime.

Debroy also said the number of countries with GST is not more than six or seven, even as some "rubbish" figures of about 140-160 countries having GST are floating around.
The Niti Aayog is a government think-tank mandated to advise on policy matters.

Debroy said the Indian GST is not an "ideal" one because of the country's federal structure while a multiple rate structure was also a problem to the new tax. "When you see figures floating around, there will be 1-1.5 per cent increase in GDP after implementation of GST. For God's sake, that is utter rubbish," Debroy said while speaking at a session during the GST Conclave organised by Hindi news channel Aaj Tak.

"For an imperfect GST, I have no idea what the figure is. It might be even more, it might be less, but this particular figure (1.5 per cent) was for ideal GST," he said.

"That figure was based on the model that the NCAER did in the course of the 13th Finance Commission report for an ideal GST. We are nowhere near that ideal GST, this is just the beginning of a process," Debroy said.

The moderator pointed out to him that Jaitley and Adhia have also talked about such a boost to GDP from the GST, to which, Debroy said, "I won't contradict them."

"That's rubbish. There are many countries in the world which have VAT, a VAT is not the same as GST. VAT is the stepping stone towards GST.