GST: India’s Grand Federal Bargain Becomes Imperfect Political Compromise After Eight Years

• The GST was intended as a grand bargain for cooperative federalism where Centre and states would pool tax sovereignty and make collective decisions through the GST Council
• Eight years later the GST has become an imperfect compromise due to short term thinking and weak commitment to federal principles from both Centre and states
• The Centre has undermined cooperative federalism by imposing cess and surcharges while delaying revenue transfers and compensation to states
• States have responded by viewing federal bargains in zero sum terms and focusing on compensation rather than working toward a single market goal
• The recent GST 2.0 rate changes illustrate this dysfunction as the Prime Minister announced them unilaterally rather than through collective GST Council decision making

Source: hindustantimes.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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