Topic – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
3) GST 2.0 will arrive in incremental stages, not at one go. Do you agree. Comment.(250 words)
Why this question
Many political parties and politicians have called for reforms in the GST structure and there have been calls to bring GST 2.0, a revised and more progressive GST regime. The article discusses the need for reform arising in the current regime and why one-time reforms in GST regime are not possible.
Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.
Key demand of the question
The question wants us to write in detail about the current GST structure and its shortcomings which call for the arrival of GST 2.0. We have to express our opinion as to why/ why not GST 2.0 would be a progressive achievement rather than a wholesale reform.
Structure of the answer
Introduction:– write a few introductory lines about the GST 2.0 E. g GST 2.0 is a revised form of GST that aims to resolve the problems and deficiencies associated with the present GST regime. Among others it aspires to cover excluded item like electricity real estate and petroleum, and evolve a common composition scheme for goods and services etc.
- Discuss the shortcomings of current GST structure and thus discuss why there is a need of adopting a newer version of GST E.g
- Finding a revenue-neutral rate by adding up state and central value-added taxes on various products
- Need to keep inflation down in the initial phases of the exercise, which resulted in many items of common consumption being kept out of the GST;
- Need to compensate states for losses, which resulted in the imposition of a cess to create a separate revenue corpus from which losses would be compensated;
- Need to coax small businesses into the GST net, if needed by giving them an entirely different set of rules to live by (as in the composition scheme)
- Political compulsion to create a progressive rate structure
- Discuss why only incremental rather than drastic reforms are possible under GST. e.g
- In the GST Council, a vote on any issue needs 75% backing, which means the centre can block any proposal with its 33% voting rights.
- A coalition of states with 25% backing can also block. When Mizoram’s vote equals Uttar Pradesh’s, a coalition of tiny states can block proposals that lack consensus. This is why the only way forward is to make one or two tweaks every few months etc.
Conclusion- based on your discussion, form a fair and a balanced conclusion on the given issue.