Do you think that the introduction of the GST in India is a step towards a greater and developed nation?

The GST is truly a profound change fundamentally, despite all the rollout hiccups. One has to see it in the medium term to be optimistic about it.

It will transform the Indian economy in the following ways :

1. One India promise: Everyone will start thinking in terms of “India as a nation” and not merely in terms of their provincial loyalties. This happens because everyone’s fate is tied together through the GST Council (where all have representation). The downside? If anyone fails to make enough revenues, they’ll question the whole system. Let’s be fair: states have sacrificed their federal fiscal freedom to be a part of the GST regime.
2. Simple is better: The simplified tax regime will be a great relief for all honest businesses. The one thing everyone loves is minimum compliance load and maximum clarity. GST theoretically promises that. It will take until 2020 for the final shape to emerge, but the hope is strong. The downside? If rate slabs don’t get rationalized, it will remain an under-optimized and a compliance-heavy system.
3. Tax to GDP ratio is all set to improve due to ‘everything’ getting into the government’s official records. From our present 16.6% of GDP to a much bigger number, the journey will give a lot of leg-space to the government to do things it otherwise needed to borrow money for. The downside? If public services’ quality does not improve, people may question the whole idea of paying more taxes. This is the greatest conundrum facing public policy making as of now.
4. Big data, transparent analysis: The GSTN and CBDT will seamlessly share data, so indirect taxpayers cannot escape the direct tax net. And GSTN and DGFT too will share data so foreign trade data become instant, and trends that much clearer and policy-making easier. The downside? Too much power in state’s hand, some would say :)
5. Formalisation: The huge informal economy may slowly be turned into a formal one over a decade or so. It will have great pains attached but needs to be finally done in a manner that jobs destruction doesn’t happen. GST forces companies to go formal, but the process is not smooth as of now - it is “yanking the informal into the formal” approach. Women empowerment will get a boost as a key driver of poor women labor participation in India is the lack for formal sector jobs. The downside? Formal doesn’t equal profitable always. Many may simply go bankrupt in the process. Bad for everyone.

Overall, in 10 to 15 years, we will see the final shape of things. We hope and pray that the end result matches the great pain and sacrifices being made today.

Jai Hind!

Source: https://www.quora.com/profile/Sandeep-Manudhane