The Economic Survey 2023, tabled before the parliament by the Financial Minister Nirmala Sitaraman reviews the performance of the Indian economy and lays the road ahead for the next fiscal year. In the survey, it was observed that the Goods and Services Tax (GST) taxpayers have increased in number from 70 Lakhs in 2017 to 1.4 Crores in 2022.
Another vital contribution of digital infrastructure has been the greater formalization of the economy. A report in The Economist (January 2023) attributes the trends of formalization of the workforce in India to the transformed digital financial architecture, the digitalised GST system and growth in the usage of UPI.
Moreover, digital systems such as the Goods and Services Tax Network (GSTN) and e-Way Bill system have enabled the formalization of business transactions, even though not implemented with cent percent perfection and existence of portal bugs and technical glitches that still haunt the taxpayers and professionals alike, the increase in number of GST taxpayers, from 70 lakh in 2017 to more than 1.4 crore in 2022, indicates the expansion in formal businesses.
“The greater formalization will enhance the productivity of individuals and businesses in the economy through improved access to credit and efficiency gains in their operations”, the survey report said.
Thus, digital technologies being at the forefront of the reforms provide a unique opportunity to accelerate India’s economic growth, the report further observed.
The formalization of transactions, for even the smallest of amounts,made possible with the wide usage of the digital payment system of UPI was also observed positively in the Economic Survey.
Formalization of transactions in business and increase in formal businesses were altogether seen as positive steps towards greater tax-responsibility of the country and towards lesser tax-evasion.
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