Taking stock of the GST regime

Fewer slabs, redressal of states' fiscal grievances would make it more effective

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Goods and Services Tax (GST) is the single most important indirect tax reform India has seen. It created a unified national market for most goods and services — some such as fuel and alcoholic beverages are still outside its ambit — 60 years after the country became independent.

GST, in many ways, was a leap of faith for the Indian state and economy. States had to be assured of guaranteed revenue growth for the first five years to agree to it, and give up their constitutional right to tax. There were concerns whether such guarantees would take a toll on the fisc. Eight years later, the answer is clear: revenue performance of the GST, as a share of GDP, has stabilised.