More often than not, people tend to compare India with China. The size of their population, perhaps, justifies such comparisons. But the systems operating in these two countries are quite different. While India is a democratic nation, China operates under a command structure. That explains why decisions take a longer time in India. The 56th meeting of the GST Council, headed by finance minister Nirmala Sitharaman and comprising state finance ministers, met for nearly 12 hours to clinch an agreement on two-slab GST 2.0 reforms on a single day. That was a momentous decision. The GST 2.0 will come into effect from 22 September. Well, it has taken eight years since the GST was launched, to course correct. Is GST 2.0 an attempt to simplify?
12 Hours and 150 Circulars to Birth GST 2.0
As our cover story argues, it is more a, long-awaited fixing of mistakes. One can endlessly debate on the why and what of GST 2.0. The fact of the matter, however, is that the GST 2.0 has finally arrived. Indeed, it is better late than never. Has GST passed the evolution stage with the launch of an improved and simplified version? Maybe not. We see GST as a work in progress. Why did it take so long for the government to course-correct? Why is 22 September fixed as the date for GST 2.0 roll-out? Quoting official sources, a report in www.shortpost.com said,”the roll-out would need preparation of about 150 circulars and this would require working on the details.” It wasn’t easy to arrive at an agreement. Opposition-ruled states such as West Bengal, Punjab, Kerala and Karnataka reported to have vociferously opposed rate cuts, citing fear of revenue loss. So much so, a voting was reportedly contemplated to clear GST 2.0. That no voting took place was, however, a different matter.
Consumption Catalyst?
One thing is clear. The opportunity cost of delays or piecemeal legislations is intangible and could be very high. As the business and industry prepare for a new life and reset their strategies, GST 2.0 must significantly help to improve the happiness quotient across the canvass. Indirect taxes are the most regressive and hit the common man as they pay tax on everyday items. GST 2.0 has done well by pushing ordinary items of consumption by the masses into lower 5 per cent or nil slab. At the same time, it has placed luxury items at 18 per cent and sin goods at 40 per cent. Read against the backdrop of a reduction in income-tax rates announced in the last budget of, GST 2.0 should help boost domestic consumption. This could not have come at any better time especially in the context of an increasingly uncertain geo-political environment which makes exports a lot tougher and in view of the continued sluggishness in private investment. Still, it is too early to rejoice. Proof of the pudding is in eating. The efficacy of GST 2.0 lies in its implementation.
