Ace investor Rakesh Jhunjhunwala says that while GST will have a much deeper impact on India’s economy than reforming the taxation system, India would grow at a double digit pace in the near future regardless of the new tax regime. “If you ask my personal judgment, post 2019-2020 we are poised for double-digit growth,” Rakesh Jhunjhunwala said in a recent interview to ET Now. “I personally feel India is poised for double-digit growth, GST is an aid to it, even without GST we would have reached there,” the billionaire investor added.
The ‘Big Bull’, as he is commonly referred to for his Warren Buffet-type style of investing for long term, said that the effect of GST will be quite far-reaching as it will result in a digitised economy and efficient logistics supply chain. GST will enable authorities to have digitalised records of every purchase, Rakesh Jhunjhunwala said, adding, “First, it will lead to digitisation. Anybody who has a business with a turnover of more than Rs 20 lakh in India will have to digitalise their business and that is going to bring in tremendous efficiency in the way we work.”
Further, Rakesh Jhunjhunwala said that GST “is going to lead to big logistical gains because companies had to (earlier) maintain warehouses in each state as they did not want to pay the central sales tax, and lorries were stopped in lots of places,” adding that overall, there is going to be some reduction in taxes and not some increase. “So, the benefits for us as a society and as a country will lead to forced morality and willingness to pay taxes. The cost of evasion will become much higher than the cost of paying it,” he added.
On the issue of anti-profiteering rule of GST, Rakesh Jhunjhunwala said that the rule is not going to cause much concern as ultimately the competition will force the companies to pass on the benefits to consumers. “If there are five manufacturers and two pass it on, the other three will also have to pass it on. Therefore, every industry will decide whether they will be able to pass it on. I do not think the anti-profiteering is going to lead to anything,” he said.
Rakesh Jhunjhunwala said that GST is a beneficiary move as it will lead to favourable tax rates. “The more Indians come into the tax net, more reasonable will be the rates be,” he said.
He also said that due to GST, there will be definite gains, both tangible and intangible, although not huge ones. “I think there will be gain but I do not think the gain is going to be big. It is going to take time. Digitisation itself will lead to efficiencies, movement of goods, exports, better logistical movements. To quantify that gain today is difficult. There are going to be as many intangible gains as there are going to be tangible gains,” Rakesh Jhunjhunwala said.
(First published on Monday, July 3 on www.financialexpress.com)