One Nation, One Tax is great, but watch out for the flip side as well!
Sree Vijaykumar
Sree Vijaykumar
From the Editor's Desk
The implementation of GST in India will be a much needed reform, but it is prudent to understand some of the negatives as well. GST aims to forge an economic union of India at a time when the economic disparity among the various states of India is at its peak. For the sake of "one nation, one tax", states have sacrificed their fiscal rights. Such economic disparity combined with India's unique political diversity renders the GST regime vulnerable to fractious demands. India is currently experiencing a 3-3-3 paradox - the three richest states are three times richer than the three poorest states. This level of regional inequality is the highest in independent India's history. Four states (Gujarat, Maharashtra, Tamil Nadu and Karnataka) account for as much inter-state trade as the other 25 states combined. One-fifth of all passenger cars and two-wheelers are sold in just two states - Maharashtra and Tamil Nadu. The average Tamilian earns Rs1.4 lakh per year, four times more than the average Bihari's annual income of Rs35,000. What is worse is that India is the only large country in the world that is experiencing subnational income divergence, i.e. the income gap between the richer and poorer states continues to widen and not shrink. More here

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