Gst swallow does not make a summer

Gst swallow does not make a summer

That goods and services tax (GST) collections have surged in November, to nearly Rs 1.05 lakh crore, seem more likely due to improved tax-gathering efficacy rather than solid recovery and increase in economic output.

Notice that manufacturing Purchasing Managers’ Index (PMI) last month has slid to 56.3, which is a three-month low. Further, power and automotive-fuel demand have actually fallen of late, what with the festive-season uptick quickly fizzling out.

The point is that the recovery remains fragile, and the way forward, surely, is to proactively policy-induce bigticket investments to purposefully boost demand, and also to bridge the large and growing infrastructural deficit.

True, the latest rail freight figure has notched almost double-digit growth, and passenger-vehicle sales have similarly traversed too, but these numbers may well dip soon.

Hence the pressing need to shore up infrastructural investments. We do need to leverage rising capital inflows by foreign portfolio investors (FPI) to better coagulate funds on the ground and gainfully step-up physical and social infrastructure.

What’s required is multi-stage review, regular audits and well-defined workflows to fast-forward project implementation.

A standard platform needs to be speedily developed for independent project appraisal and follow through, akin to the Gateway Review process in the UK.

Project delays have been endemic in large projects pan-India, and we do need to set up a new mechanism to ensure that all key clearances and approvals are obtained upfront prior to bidding for projects.

In parallel, what’s required is long-pending reform of the corporate bond market to incentivise greenfield and brownfield project funding going forward.

Credit enhancement of infrastructural bonds through partial credit guarantees would boost demand for such bonds. In tandem, the central bank needs to allow usage of corporate bonds in its Liquidity Adjustment Facility (LAF); we also need exchange-based repo trading in corporate bonds for an active and liquid market design. The future is now.