With the Rajya Sabha passing the Goods and Services Tax (GST) Bill, World Bank Chief Economist Kaushik Basu on Friday said the new tax regime will usher in long-term economic benefit, though there could also be short-term price jerk or inflation.
"By cutting down on transaction costs and double taxation at different points, it will make India a common market. And this can give a big fillip to India's growth rate in the long run," said Basu.
"So the short-run effect -- I know people get immediately concerned about what will be the effect on prices. I don't know what will be the effect (on prices). But that's a one-time effect. The long-run effect is extremely beneficial," he said on the sidelines of a programme here.
As for immidiate inflationary effects of GST, the World Bank's Senior Vice-President said: "I do not have on hand immediate inflation figures. The World Bank doesn't do those calculations. What I'm stressing is the immediate long-term effect is hugely positive of this kind of reform."
He said India has been one of the fastest growing economies in the world with about 7.5 per cent growth projection for 2016.
According to Basu, both monetary and fiscal policies have been well executed in the country, fuelled by low oil prices paving the way for growth.