A sharp statement from senior Congress leader and Rajya Sabha MP P Chidambaram has focused national attention on the government’s latest GST reforms. He acknowledged the rationalisation and reduction in GST rates as positive, but underscored that the decision comes “eight years too late.” His pointed criticism highlights both the reforms’ potential impact and the delay in implementing them.
Chidambaram argued that the prevailing GST design and rate structure “ought not to have been introduced in the first place,” and recalled that the opposition had sounded alarms for years, but with no effect. He declared that “our pleas fell on deaf ears,” emphasising that criticisms went unheeded since implementation in 2017.
The timing of the reforms, announced during the first day of the 56th GST Council meeting, prompted Chidambaram to question the government’s motives. He speculated on multiple pressures behind the move—sluggish growth, rising household debt, falling savings, forthcoming state elections in Bihar, and tariffs imposed by the US under Donald Trump. He left open the possibility that all these factors may have converged to compel the change.
These revisions mark a structural overhaul: the GST Council has collapsed the existing 12 per cent and 28 per cent slabs into a simplified two‑tier system of 5 per cent and 18 per cent, to take effect from 22 September. Finance Minister Nirmala Sitharaman characterised the move as a “Diwali gift to the nation,” with unanimous backing from all states.
Economists have pointed to significant potential benefits. Garima Kapoor of Elara Securities forecasts a boost of 100–120 basis points to GDP growth over the coming 4–6 quarters, which could help offset tariffs affecting Indian exports to the United States. Nilesh Shah of Kotak Mahindra AMC noted the rationalisation could lower inflation, enhance ease of doing business, stimulate consumption, and support fiscal consolidation.
Industry bodies also weighed in, welcoming the reforms. The Confederation of Indian Industry called them a “phenomenal milestone” that would transform the business environment. ACMA praised uniform taxation for auto components as a long-overdue reform that will curb the grey market, simplify compliance, and empower MSMEs. Anand Mahindra also voiced support, urging “more and faster reforms” to attract investment and boost consumption.
Political reactions beyond Chidambaram also followed. The TMC hailed the rate rollback as a “victory for common people,” accusing the BJP-led regime of being “tone‑deaf” and only acting when pressured. Chief Minister Mamata Banerjee’s long-standing criticism of insurance premium taxation as “cruel” and “anti‑people” was cited as vindicated by the reforms.
Prime Minister Modi and Finance Minister Sitharaman framed the reforms as fulfilling prior commitments. Modi described the Council’s unanimous decision as advancing a “next‑generation” GST regime, aligning with Independence Day undertakings to ease life and spur economic growth, particularly for farmers, MSMEs, women, youth and the middle class. External Affairs Minister S. Jaishankar and other senior leaders echoed the sentiment, citing the impact on ease of living and doing business.
Economists also assessed the fiscal implications. The expected revenue loss from rate cuts could be between ₹22,000 crore and ₹48,000 crore in FY26, depending on estimates and offsets from stronger demand. The slippage is seen as fiscally manageable—partly mitigated by converting GST cess into regular revenue and increased consumption volumes.
Chidambaram’s critique, though acknowledging the reform’s utility, remains fixed on its tardiness. By emphasising that the GST’s original structure was flawed from the outset, he reinforces the notion that timely reform might have prevented prolonged burdens on households and industry alike.
Markets Surge on GST Revamp and Festive Hopes 