GST rationalisation impact on inflation depends on the effect on CPI components: Bank of Baroda Economist

Chennai, Aug. 16 -- The impact of the proposed rationalisation of the Goods and Services Tax (GST) on inflation would depend on the effect on the consumer price index (CPI) components, said a top economist at Bank of Baroda.

He also said the impact on investment will be driven by the final effect on consumption. If consumption increases, it can spur more investment in specific products.

The Indian government has announced the idea of having two major GST slabs viz., 5% (merit) and 18% (standard).

"The highest slab of 28% would be abolished and all goods and services in this bracket moved to the 18% rate. 99% of goods in the 12% rate will move to 5%. The balance 1% would go to 18%. The existing 40% rate would hold for tobacco and other si...