This weekend, India will see the biggest reform tackled yet by Prime Minister Narendra Modi’s administration transform the market, when the country’s 17 state and Federal taxes become unified. (well, sort of.)
While proponents see this as a decisive moment that will help India reach its true potential, others lament the reforms do not go far enough. The Goods and Services Tax (GST) will replace a plethora of local levies, but some note that recent negotiations have eroded the reforms – there will be six national rates, and state-level tax authorities will retain jurisdiction along with national ones.
Economists have predicted that a simple form of the new Goods and Services Tax could have added a full 2 percentage points to India’s economic growth rate. The Economist reports, however, that with recent changes it will likely only add less than half of that, only after a difficult adjustment period.
One thing is for certain, major success, or failure, of the reforms both have the potential to cement Modi’s legacy.