GST 2.0 ignites economy's afterburners

For 70 years after independence, India was one nation but never truly one market. A bewildering web of state-level taxes and barriers made the simple act of moving goods across state borders both time-consuming and costly. It was often cheaper to ship iron ore to China, get it value-added there, and then bring the finished product back to India, rather than attempt the same exercise domestically.

- BAIJAYANT 'JAY' PANDA

That was a self-sabotaging policy structure that somehow persisted for decades. The solution—an integrated Goods and Services Tax (GST)—was widely discussed by experts and successive governments, but it eluded the nation. Finally, in July 2017, thanks to enormous political will and painstaking negotiations across party lines and with the states, GST became a reality.

As with any paradigm-shifting reform, the beginning was not without teething problems. Businesses had to adapt to the new regime, technology platforms had hiccups, and sceptics predicted failure. But the system found its rhythm. Multiple indirect taxes collapsed into just four slabs, cascading tax inefficiencies were drastically reduced, and interstate movement of goods sped up. The doomsayers were proven wrong.