New Delhi, Sep 4 The government's move to revamp the goods and services tax (GST) structure with two major slabs of 5 per cent and 18 per cent will put more money in the hands of rural people amid increasing prosperity in the far-flung regions, NABARD Chairman Shaji KV said on Thursday.
"People are ready to move forward and India's growth trajectory you are aware. Over and above that, there is a good monsoon and 8 per cent more cropped area is there. So, the setting was correct, and then the GST cut is putting more money in the hands of the rural people," the NABARD Chairman told IANS.
He said that rural prosperity is already coming in and the recent NABARD rural sentiment survey proved that there is more formalisation and cost reduction in terms of accessing credit because more people are borrowing from the formal sources. The inflation sentiment is also benign.
The chairman noted that with the new GST reforms, cost of most farm equipment will come down as they will fall under the 5 per cent slab, and many of them will remain tax-free as well.
"So, that means more money in the hands of the people. Since the mechanisation cost is coming down, they will now invest more in capacity addition, which would augur well for future production as well," Shaji stated.
According to him, the government move would not only boost the current but future production as well.
He pointed out that the rural income demand is increasing, which means it will give rise to more production, thus strengthening the manufacturing sector.
"It means Atmanirbhar Bharat is actually playing out well in rural areas and the government has taken right steps to give it a boost with the current GST rate cuts," he mentioned.
The farm machinery, like tractors, will become cheaper, and their operational cost will also come down.
"We are now focusing on building capacities because the productivity has to catch up to the levels of international productivity,” he noted.
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