Next Steps in Finance: Non-Financial Reforms Ahead
Union Finance Minister Nirmala Sitharaman has recently made headlines with her discussion on the latest reforms in the Goods and Services Tax (GST). These reforms aim to stimulate the economy by encouraging increased consumption among consumers. The introduction of a new two-tier GST rate structure of 5% and 18%, effective from September 22, has been a significant move in this direction.
When asked about future priorities for the finance ministry, Sitharaman highlighted the importance of reforming non-financial regulators. Institutions like the Competition Commission of India (CCI) and the Food Safety and Standards Authority of India (FSSAI) are on the agenda for review and reform. She expressed that these changes are essential for enhancing trust-based economic governance and ensuring a smoother process for businesses in terms of inspections and compliance.
In her earlier budget speech, Sitharaman announced the formation of a regulatory reforms committee to review all regulations in the non-financial sector. She stressed that the goal is to streamline processes and create an environment that fosters business growth. States are encouraged to participate in this initiative, which aims to simplify regulations and strengthen economic trust.
The GST Council has already taken significant steps with the recent reforms. Sitharaman conveyed optimism about the impact of these changes on consumer behavior, particularly in light of the ongoing recovery from the pandemic. She mentioned that the industry has reported a slowdown in bookings for items like cars and white goods, attributing this to consumers delaying purchases.
However, she believes that with the new GST rates in place, there is potential for a spike in consumer spending post-September 22. She referred to this anticipated surge as "revenge buying," similar to the trend observed after the lockdowns were lifted. Sitharaman is hopeful that these reforms will encourage consumers to return to the market, thus boosting economic activity.
In conclusion, the focus on non-financial reforms and the positive changes in the GST structure are expected to create a more favorable environment for both consumers and businesses in India. Sitharaman's proactive approach highlights the government's commitment to enhancing the ease of doing business and fostering a vibrant economic landscape.
