100-Word Take | Lower GST rates could mean higher revenues

Ravi Ananthanarayanan

Is the government shooting itself in the foot by considering a cut in GST rates? Elections, you say? It’s debatable if lowering rates on cement, high end television sets and air-conditioners can swing election results. There may be another reason. Even after lowering GST rates four times since 2017, collections have broadly trended up. The latest reduction in July was to hit revenues by Rs 6,000 crore. August did see revenues dip but they subsequently stabilised and rose. Better compliance, a shift to the organised market and higher demand are possible reasons.

If lower rates don’t hurt revenue growth, that’s good for the economy. And if voters are happier, that’s the icing.