India's new tax will boost growth in the long term

Subject

Implementation of the GST in India.

Significance

The GST, inaugurated on July 1, has met with a mixed reception, but has nonetheless been hailed by Prime Minister Narendra Modi as marking the final stage in the integration of the Indian nation. If teething problems can be overcome, it promises to give transparency to a notoriously opaque economy.

Impacts

• The individual states' fiscal deficits should decrease.
• GST service providers will be increasingly in demand.
• The GST Council may provide a blueprint for more cooperative relations between states and the centre.