India can absorb inflationary pressures from GST rollout -:- Equity Research

India on Wednesday paved the way for the biggest and most important tax reform as the Rajya Sabha approved the Goods and Services Tax (GST) Bill. Uday Kotak, Executive VC & MD, Kotak Mahindra Bank   , said passing of the Bill is a symbol of ‘One India’. While Arundhati Bhattacharya, Chairman, State Bank of India   said GST was a very important piece of legislation that will improve efficiencies within the system. Agreeing with Bhattacharya’s views, Kotak says GST will bring in consolidation in the tax system and remove inefficiencies from the system. Both of them feel this will be a big boost to the manufacturing sector and passage of goods through different states will become easier and simpler. Both also agree on the fact that even though the passage of such a landmark tax reform could add to inflationary pressures, India currently is in a situation where it would be able to absorb a bit of upward pressure on inflation. Bhattacharya also believes that GST would not impact banks badly and that although initially there could be some teething problems, the bank and the country is ready for it. Kotak says the long-term benefits of GST would far outweigh the short-term impact on inflation. He expects the implementation of GST by the first half of FY18. Both are of the view that administrative mechanism should be made easy for GST. They also spoke on the short-term hurdles banks could face on different issues but were confident that the government would look into those and solve them.