17 May, 2021

Yellow Blip At The Crossroads

GST is to roll out this July—and move Indian economy in a different gear. Not that all logjams are to end in a jiffy.

Illustration by Sajith Kumar
Yellow Blip At The Crossroads

In the end, the government succeeded in breaking the biggest deadlocks in negotiations for a Goods and Services Tax—India’s biggest reform since the 1990s. And that, without much noise because for every pro­blem, the finance ministry had readied a backup, middle-of-the-road solution. A July rollout is now on track. To be sure, there’s a lot of work to be wrapped up.

Businesses are struggling to get their tax maths right. A complex, backend infrastructure, part-physical, part-virtual, needs to be tested. But there could be no better start to 2017 for Prime Minister Narendra Modi, who can now look to shrug off some of the dire consequences of demonetisation. The status of a GST-compliant economy alone will improve India’s ease-of-doing-business rankings by a few points.

With the GST, Asia’s third-largest economy will move into a different gear. Lorries piling at interstate checkpoints, a common reason behind highway jams, will vanish. Speedier and seamless movement of goods—a sign of mature economies—itself raises the GDP...

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