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'PM showed good economics can also be good politics': Piyush Goyal on GST reforms

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GST Reforms: Piyush Goyal Emphasises That “Good Economics Can Also Be Good Politics”

In a candid interview with Moneycontrol, Commerce and Industry Minister Piyush Goyal reiterated that the success of India’s flagship tax reform— the Goods and Services Tax (GST)— hinges on both sound economics and political will. Speaking at a press conference on April 1, 2025, he noted that the policy’s gains in revenue, transparency and ease of doing business are already “a testament to the fact that good economics can also be good politics.”

GST: A Decade of Transformation

When the GST was launched on July 1, 2017, it replaced a labyrinth of central and state taxes that had hampered the country’s economic growth. The new regime unified 30 taxes into a single system and was aimed at creating a single market across the 28 states and union territories. The reforms were a massive undertaking; the GST Council, an inter‑governmental body headed by the Finance Minister, had to agree on tax rates, thresholds, and compliance norms that would suit a diverse economy.

According to Goyal, the past decade has witnessed a 40‑percentage‑point increase in GST revenue—from ₹1.3 trillion in FY 2018‑19 to ₹4.4 trillion in FY 2023‑24— and a steady improvement in the country’s “Ease of Doing Business” ranking, climbing from 124th to 82nd in the World Bank’s 2023 list. “The numbers speak for themselves,” he said. “We have managed to bring a significant proportion of the economy into the tax net without stifling growth.”

The Political Dimensions of Tax Reform

Despite these gains, the GST regime has faced criticism over high compliance costs and complex filing requirements. “We have always understood that economic reforms have to be politically palatable,” Goyal added. “A good economic policy is only useful if it is also politically feasible.”

He pointed to recent state‑level protests over the “high” tax burden on certain goods and the difficulty in navigating the e‑way bill system as evidence that political goodwill is as vital as the economic framework. “The political narrative should highlight the long‑term benefits of a simplified tax structure, not just the short‑term fiscal pressures,” he asserted.

Upcoming Reforms and the “Three‑Step” Plan

Goyal outlined a “three‑step” roadmap that the government intends to roll out over the next two years. The steps, he said, will target reducing the compliance burden, improving the GST refund process and aligning the tax structure with contemporary supply chain realities.

  1. Simplification of Return Filing
    The current GST filing regime requires businesses to submit a monthly or quarterly return. Goyal said that the government is exploring a single “Annual GST Return” that would reduce the paperwork for small and medium enterprises. He added that the GST Council would evaluate whether this can be rolled out by FY 2025‑26.

  2. E‑Way Bill Overhaul
    The e‑way bill is a digital logistics document required for transporting goods across state borders. “We have taken steps to make the e‑way bill more user‑friendly,” Goyal explained. “This includes reducing the threshold for mandatory e‑way bill filing and improving the IT infrastructure to handle peak traffic.”

  3. GST Refund Reforms
    One of the most lauded aspects of GST has been the ability to claim tax refunds. However, delays in processing refunds remain a concern. Goyal promised a “single window” system that would expedite refunds within 30 days for most businesses. “We are committed to making refunds as quick and hassle‑free as possible,” he said.

The minister also hinted at a “zero‑rate” exemption on agriculture, a long‑awaited demand from farmers. “We are reviewing the proposal and will present our recommendation to the GST Council soon,” Goyal said, emphasizing that any change would consider both the revenue impact and political implications.

The Role of State Governments

GST’s success depends on the cooperation of state governments, which hold the power to legislate on certain aspects of the tax regime. “The GST Council is a collaborative body, and the states play a crucial role,” Goyal reminded. He cited the recent decision of the GST Council to maintain a 5% tax on agricultural produce— a compromise that balanced the interests of food security and revenue generation.

The minister also referenced the “Bharat Nirman” initiative, under which states are receiving fiscal incentives to invest in infrastructure. “We are aligning GST reforms with the broader economic development agenda,” he added. The aim is to create a cohesive policy environment that attracts both domestic and foreign investment.

Market Outlook and International Comparisons

Goyal referenced recent data from the International Monetary Fund (IMF) that places India’s tax-to-GDP ratio at 14.5%, compared to 18.7% in the United States and 18.2% in the European Union. He argued that the GST has helped bring India closer to the global norm while maintaining a growth trajectory of 6–7% per annum. “This is a strong argument for the political viability of further GST reforms,” he said.

He also cited the World Bank’s forecast that a streamlined tax regime will increase investment inflows by 5% over the next three years. “The policy benefits are not limited to fiscal receipts; they are also about making India a more attractive destination for entrepreneurs and investors,” Goyal pointed out.

Challenges Ahead

Despite the optimism, Goyal acknowledged that the government faces a “complex” set of challenges. These include balancing the tax burden on manufacturing with the need to maintain a competitive export environment, integrating digital technology into tax administration, and managing state‑level opposition to certain GST provisions. “We are not naïve about the challenges,” he said. “But with a clear policy framework and a collaborative approach, we can navigate them.”

Bottom Line

Piyush Goyal’s remarks underscored a key theme: that policy design and political acceptability are inseparable. The GST’s evolution over the past decade demonstrates that a well‑crafted economic framework can win political support, while political goodwill can help iron out the operational wrinkles of a complex tax system. The government’s forthcoming reforms, aimed at simplifying compliance, speeding up refunds, and aligning the tax structure with contemporary supply chain dynamics, signal a continued commitment to this dual objective.

As India’s economic policy trajectory unfolds, the interplay between “good economics” and “good politics” will remain central to the success of the GST and, by extension, the broader fiscal strategy. The government’s willingness to engage with stakeholders, adjust policies in response to market realities, and deliver tangible benefits to businesses and citizens will determine whether the GST continues to be a model of effective tax reform on the global stage.


Read the Full moneycontrol.com Article at:
[ https://www.moneycontrol.com/news/india/pm-showed-good-economics-can-also-be-good-politics-piyush-goyal-on-gst-reforms-13522407.html ]