For any careful reader of news in India, articles about the new Goods & Service Tax (GST) ver the last week or so would have been a puzzle. For years, literally, we read about how GST was this holy grail of indirect taxation which would bring huge benefits. It would unify India into a single market without tax barriers, reduce the multiplicity of indirect taxes to one, lead to easier and wider tax compliance, lower prices, and so on. However, GST never seemed to be able to get off the ground and after a point it seemed that the political will and cooperation needed for such a huge upheaval in India's tax system would never be found.
However, now that the GST is at our doorstep, it is almost amusing at the way people have suddenly discovered flaws in its structure. Aspects that have been settled and public for years--like separate state and central GSTs, or the exceptions for petroleum and liquor--are being pointed out as huge flaws. That GST will be easier for bigger, organised businesses to handle has also been realised only recently. There have even been comments that a flawed GST could be worse than no GST at all, presumably meaning that lets scrap the thing till perfection can be achieved.
All this was to be expected I guess. As I'd written on these pages soon in the context of investments after the new government took over, a period of economic reforms looks pleasant from afar but is actually one of great upheaval. The more effective the reforms, the greater the pain will be initially. However, the benefits soon outweigh the problems, as anyone who remembers the 'Bombay Club' of the early 90s will testify. As for whether GST is an effective reform, you should note that any businessperson you talk to is in its favour, and all the carping comes from the theorists.
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