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India’s Goods and Services Tax: Context, Design and Policy Spillovers

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  • Raghbendra Jha
  • Azad Singh Bali

Abstract

The 2017 Goods and Services Tax (GST) was one of most ambitious tax reforms introduced in India. This paper documents the context in which the GST was introduced – particularly the regional disparities in economic capacity, discusses design challenges in developing the GST,and the basic contours of the newly introduced GST. The paper advances two arguments. First,the he efficacy of India’s tax reform must be assessed in the context of federal transfers and larger spillovers of the GST to the economy. Further, there is a compelling necessity to review and recalibrate the entire gamut (and not piecemeal) of federal relations – tax, expenditure and transfers. This is critical to ensure the stability and predictability needed to ensure that India’s state driven growth blossoms and attains full fruition.

Suggested Citation

  • Raghbendra Jha & Azad Singh Bali, 2023. "India’s Goods and Services Tax: Context, Design and Policy Spillovers," ASARC Working Papers 2023-02, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2023-02
    as

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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2023-10/gst-paper.pdf
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    References listed on IDEAS

    as
    1. Emran, M. Shahe & Stiglitz, Joseph E., 2005. "On selective indirect tax reform in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 599-623, April.
    2. Indira Rajaraman, 2007. "The Political Economy of the Indian Fiscal Federation," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 4(1), pages 1-51.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Fiscal Federalism; GST; federal transfers; India;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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