I have a confession that will not improve my standing at dinner parties: I read GST Council documents voluntarily. They contain none of the pleasures of a novel and rather more footnotes than a sane person needs, but they reveal something political speeches often conceal. Reform is usually not a trumpet blast. It is the slow removal of clauses, rates, forms and anomalies that accumulated because every government before yours found postponement easier than repair. India’s move towards two principal GST rates, 5 per cent and 18 per cent, is precisely that kind of repair. It deserves more credit than the opposition is willing to give it.
The government’s official explanation of the revised structure is inevitably self-congratulatory, but the central fact survives the publicity language: the rate map is substantially easier to understand than the four-tier arrangement taxpayers inherited. The later account of the next-generation process reforms also records a system dealing with invoices and e-way bills at extraordinary scale. One may dislike the slogan “One Nation, One Tax”; one cannot seriously pretend that returning to fragmented state levies, octroi posts and cascading taxes would be progress.
The reform is real even if it arrived late
I will readily concede the obvious criticism. The Modi government should have rationalised GST earlier. The original structure was too elaborate, compliance was especially bruising for smaller firms, and repeated rate changes produced uncertainty. Businesses do not enjoy discovering that their product has migrated between slabs after the packaging has been printed. A government that promised simplicity created, for several years, a system that required an accountant to explain why a modest restaurant bill had become a constitutional seminar.
Yet that history strengthens rather than weakens the case for welcoming the correction. Governments should be judged not only by whether they made mistakes, but by whether they can discard an arrangement that no longer works. The new structure concentrates ordinary consumption within two understandable rates while retaining a special higher rate for selected demerit or luxury goods. That is not perfect tax theory. It is, however, better administration. India’s political culture has acquired the odd habit of treating a delayed reform as if delay permanently invalidates reform. By that logic, nothing difficult should ever be fixed after its first deadline.
Congress’s response has been characteristically awkward because GST is an inconvenient subject for Congress nostalgia. The party can claim intellectual parentage for a national goods and services tax, and it often does. But the version discussed during the UPA years remained trapped in negotiation, mistrust and administrative unreadiness. The BJP government actually implemented it, absorbed the political damage and then revised it. I do not object to Congress reminding voters that GST was not conceived in 2014. I object when remembrance is inflated into delivery. Owning a blueprint is not the same thing as getting the bridge built while traffic is moving.
What the consumer should demand
The most persuasive argument for rate rationalisation is not ideological. It is visible on a bill. Fewer slabs reduce classification quarrels, make prices easier to compare and lower the scope for arbitrary distinctions between products that are functionally similar. A tax officer should not have to decide whether a snack is sufficiently different from another snack to justify another rate. A shopkeeper should not need a weekly bulletin to know what to charge. Every bizarre classification is a small invitation to litigation, discretion or accidental non-compliance.
Lower rates on commonly purchased goods can support demand, but I would not promise that every rupee of tax relief will instantly appear as a lower sticker price. Markets are not government circulars. Existing inventory, input-credit adjustments, freight costs and retailer margins all affect pass-through. The government must therefore monitor sectors where manufacturers advertise tax changes yet quietly preserve the old effective price by altering discounts. Pro-government commentary becomes propaganda when it assumes implementation by press release. The reform earns credit; enforcement must earn its own.
There is also a federal question worth taking seriously. States depend heavily on GST revenue and are entitled to worry about collections, compensation and the loss of fiscal room. The Council mechanism matters precisely because the Union cannot treat states as branch offices. The encouraging feature of this round is that simplification emerged through the Council rather than unilateral theatre. The government should publish clear, regular data on collections and state-wise settlement so that legitimate fiscal questions cannot be converted into speculative outrage.
What I reject is the reflexive claim that any indirect-tax reform is inherently anti-poor because rich and poor consumers may pay the same rate on a given item. GST is one component of the fiscal system, not the whole moral universe. Progressivity also comes through direct taxes, transfers, food support, health expenditure and the zero- or low-rating of essentials. The sensible question is whether the combined structure raises revenue with less distortion while shielding basic consumption. Chanting “regressive tax” without examining the schedule is activism masquerading as analysis.
The opposition’s missing alternative
Congress and its allies are excellent at describing administrative friction as proof of sinister intent. They are much less specific about the structure they would enact. Would they restore four principal slabs? Which goods would move upward? How would they replace lost revenue? What compliance regime would they offer small firms? There is no shame in opposing a government proposal, but an opposition aspiring to govern must eventually graduate from adjectives to tables. Tax policy is where rhetoric meets arithmetic, and arithmetic is famously unimpressed by press conferences.
The left’s preferred answer is usually a more expansive state financed by taxes that are somehow painless, perfectly targeted and borne by somebody else. That fantasy collapses in a country where the formal direct-tax base remains narrower than the scale of public expectations. India needs efficient indirect taxation while it continues broadening direct-tax compliance. It also needs growth, because redistribution without a larger productive base becomes a contest over scarcity. Simplifying GST helps formal firms scale and reduces the administrative tax paid in time, consultants and uncertainty.
I am particularly pleased that the reform conversation has shifted from merely adjusting rates to improving processes. Faster registration, predictable refunds and fewer intrusive disputes matter as much as the headline slab. Exporters cannot pay workers with a pending refund. A small manufacturer cannot treat working capital locked in the tax system as a philosophical inconvenience. If the government wants “ease of doing business” to mean more than a conference backdrop, it must measure the number of days between a valid claim and settlement, publish the result and punish needless delay.
Technology is helpful but not absolution. A portal can standardise compliance; it can also standardise frustration. GST’s early technical failures damaged confidence because officials appeared to assume that a digital obligation was automatically a simple obligation. The next phase should offer assisted compliance for micro-enterprises, stable return formats and genuine notice resolution rather than automated demands that require professional intervention. The state saves money by digitising. Some of that saving should be returned to citizens as usable design.
Credit, with conditions attached
My support for the reform is therefore not a blank cheque. The 40 per cent special rate should remain tightly confined rather than becoming a convenient cupboard into which ministers place politically unpopular products. Rate stability must become a principle. The Council should resist using GST as a weekly instrument of industrial policy, because every special favour creates another lobby seeking equal treatment. Finally, the government should simplify penalties for good-faith errors while remaining severe on deliberate evasion. A system earns voluntary compliance when it distinguishes confusion from fraud.
Nor should the BJP oversell the change as if all household anxiety has vanished. Food inflation, jobs, housing and medical costs will not be solved by a cleaner GST schedule. Voters are capable of holding two thoughts: a reform may be worthwhile, and their monthly budget may still be strained. The government’s strongest argument is competence, not miracle-making. It should say plainly that this is one useful improvement in a much longer economic programme.
Still, politics requires proportion. India has moved from a bewildering rate architecture towards a simpler national system. The same opposition that once accused the government of refusing to listen now struggles to acknowledge a substantial correction. I suspect the reason is uncomplicated: admitting that the BJP can reform its own reform spoils the cherished story of an arrogant, immovable regime. Reality is less convenient. The government made GST too complicated, endured the consequences, learned and simplified it.
I would rather live under a government capable of revision than an opposition sustained by selective memory. Congress may continue to claim that every sound idea began in one of its committees. Fine. Committees have their place. But Indian households and firms live in the world of execution, where invoices must clear and goods must move. On that ground, the two-rate GST structure is a serious improvement. Giving the government credit for it is not sycophancy. It is the minimum honesty that budget documents, unlike partisan nostalgia, tend to demand.
