Thoughts on GST Council - Heightened Uncertainty & Black Swan Risks

Considering reciprocal tariff measures, now GOI is compelled to reduce Import duties.However domestic GST reductions are hanging fire for long esp on Health Insurance since Consumers do not have Bargaining power in the GST council to compel GST council to reduce the rates.

FM and GST Council will have to keep this in mind and slash the rates from 24% to 20% and 18% to 15% inorder to minimise the tax burden on the common man who has no clear representation in the GST Council .This will definitely boost consumption by putting more money in the hands of the people and will more than offset the revenue foregone. In times of Uncertainty, Kindly initiate steps to hear the Citizens' voice in GST Council. Is it not the Common Citizen who has an important stake as beneficiary of States' spending whereas FMs of the States have a mandate only to augment its resources to spend?Revenue side is represented whereas the beneficiary side remains unrepresented or under represented!

2)45 % GST+ TCS 1% on Cars is correct. This must definitely come down . If Personal Consumption is down, it is because of high GsT rates on top of the Inflation in the last few years , hampering discretionary income in the hands of aspirational middle class. GST council must take immediate cognisance of this .Central Govt must boldly undertake to compensate States at 8- 10% revenue growth for 5 yrs ,to push for GST rate reductions.

3)GOI is working on reduction in Fiscal deficit to 4.4% in FY25-26 and a Debt to GDP ratio of 56.1% as per Statement of Fiscal Policy under FRBM Act,2003,with a goal of reducing the Debt to GDP ratio to about 50%(approx) with an expected Nominal GDP growth rate of 10% to 11% over the next 5 years. While these Goals and Estimates are great what are the Black Swan events that can upset this calculation and so must provide for these risks.Therefore, GOI must have a cushion for a rise in FD and also an unexpected calamity that may push up Debt to GDP ratio.

4)The bigger question is -are the States aware of these Risks.They cannot wash off their hands by blaming the Centre.They have an equal responsibilty if not a higher responsibility on fiscal prudence.Why not SC take up freebies issue on suo motu basis and declare any further freebies must be linked to additional mobilisation of resources and not through borrowings.

See the Uncertainty Index of US to understand the increase in Uncertainty and Risks

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