Neither good, nor simple

The GoM's proposals may be well-intended, but they will make the GST regime more complex

The only argument in favour of the Group of Ministers’ (GoM) recommendation of a special goods and services (GST) rate, in addition to a slew of rate tweaks for over 148 items including readymade garments, is as follows: In an environment where inflation is hurting lower income households, the GoM is right in its objective of making premium products pricier and items used by the common man cheaper.

It is also being argued that it is the top end of consumption that's holding up well, but the overall consumption as reflected in the private final consumption expenditure has been growing at a subdued pace. With the GDP growth having clocked in at a seven-quarter low in the September quarter, and GST collections having moderated quite a bit, affordability must take precedence over complexity.

The GoM is also probably hoping that placing a few more goods in the high-end slabs can enhance the collections and help the common man.