India has signed a free trade agreement with itself: Economist

Even as Parliamentarians unanimously ensured the passage of the GST Amendment Bill late Wednesday, some economist says the government still has a long way to go ahead in terms of a proper GST implementation on April 1, 2017. All reforms have near-term dislocational impacts. This is akin to India signing a free trade agreement with itself, said JPMorgan Economist Sajjid Chinoy. It shouldn't be unprecendented that in first couple of years there may be growth inhibiting feature since service tax rates will go up and goods tax will come down, he said. Slowdown in services growth and rise core consumer price inflation will only be short-term transitional changes, he said. In the long-term, GST will lead to reduction in prices, he added.Meanwhile, Rahul Ghosh, Vice President at Moody's Investors Service, said, it is a historic step and to a large extent seen a flagship reform for market participation in terms of willingness and ability of the Modi administration to pass through key economic legislation. There is still a long way to go and states will have to look at amendments, he said, adding that it will pave the way for rollout and which is credit positive for corporates and the government "GST implementation being credit positive, we are taking medium term view," he said.Watch video for more...