Скачать или смотреть Fixing India's GST System, Big Ideas 58

Mr. Arbind Modi, a tax policy expert who was pivotal in designing India’s original GST system, argues that the new GST 2.0 reform is a missed opportunity that fails to correct the core flaws of its predecessor.

This conversation explores the specific distortions and economic consequences of the new tax structure.

1. Why is the denial of input tax credit so damaging to the economy?
2. Will the new, lower tax rates actually reduce prices for consumers?
3. How does the GST 2.0 framework create a bias in favour of imports?
4. What would a truly effective GST reform agenda look like?

Mr. Modi explains how the continued denial of input tax credit on capital goods acts as a tax on investment, hurting total factor productivity and long-term economic growth. He analyzes why the headline rate cuts may not translate into lower consumer prices due to low pass-through effects and other market frictions. This breakdown of India's tax policy highlights the deep structural issues within the GST framework, its impact on trade neutrality, and what a better consumption tax system for the Indian economy should prioritize.

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