Business

GST Will Unify Country As One Market: Raghuram Rajan

New Delhi; Dec11: Giving thumbs up to the tax reform that will "unify" the country as one common market, RBI governor Raghuram Rajan on Thursday said the implementation of the goods and services tax (GST) regime will widen the tax net without increasing tax rate.

More people coming under the tax ambit would mean more revenues and people sharing the revenue burdens; which, he said, was a good thing for India.

"If you ask for my opinion, GST is absolutely a good thing for the country. There are two big effects.... increase the tax net; while not increasing the tax rate. The other would be reducing barrier between states," he said responding to queries from students and guests after delivering a lecture at the Presidency University here.

Stock market sentiment has turned weak, of late, on fears of delay in the passage of GST bill, which is awaiting Rajya Sabha's nod for the indirect tax arrangement to kick in from April 1, 2016.

The second benefit of GST, Rajan said, will be to "unify the country", reduce barriers between states and provide a "common market".

Amid companies reeling under the effects of debt and banks grappling with the bad loan situation, Rajan called for "moderation" and said some debt is good but not too much. "Avoid over borrowings," he said.

According to the RBI governor, the current trend of "populism" is wrong. "My definition of populist summary is who proposes simple solutions to everything. And, who doesn't recognise that the world is really a complex place. I think, we are today in the world of populism; whether populism of left or right who always have simple, clear and absolute wrong solutions to everything," he added.

He said distorting price in a significant way eventually leads to "mis-allocation" of resources and long-term harm.

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