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India's Tax Reform
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India's Tax Reform

The GST Is an Important, Limited First Step

Praveen Chakravarty
Foreign Affairs, 2017
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In a historic tax overhaul, India seeks to standardize tax rates for the first time across the country’s 36 states and territories. From afar, India’s motto of “one nation, one tax” makes a lot of economic sense. But as political economist Praveen Chakravarty writes in Foreign Affairs, the new tax code in its current form isn’t sustainable, considering the country’s political, demographic, social and economic realities.

Take-Aways

  • India’s new tax regime unifies the tax code to facilitate trade among the country’s different territories and promote economic growth.
  • India’s new tax regime could lead to an increase in GDP of between 1% and 4%.
  • New Delhi’s one-rate-fits-all approach to taxation is ill-suited to a country as diverse as India.

About the Author

Praveen Chakravarty is a senior fellow at the IDFC Institute, a think tank in Mumbai.

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