Nomura predicts India’s GST will increase inflation by under 20 basis points. Long-term, the firm expects boosted productivity and government revenue.
Nomura’s Outlook on GST’s Inflationary Impact in India
Japanese financial research firm, Nomura, indicated that the Goods and Services Tax (GST) would likely have a minimal effect on India’s inflation rates. According to their assessment, the price impact would be below 20 basis points.
Despite this low inflationary expectation, the company forecasted that economic growth might experience minor challenges leading up to the GST’s introduction. Nomura described this as a “marginally negative” influence on growth, suggesting that GST would be fiscally neutral in the immediate future. The financial institution also echoed the government’s stance that, eventually, GST would eliminate the cascading tax effect. This change is expected to enhance productivity, reduce expenses, contribute to economic formalization, and generate substantial revenue benefits for the government. (Source: economictimes.indiatimes.com)
