GST Reforms in India: Why Modi Government Acted After Eight Years

The GST reforms in India have arrived late. Too late, perhaps, for small businesses and middle-income households already crushed by its weight.gst-council-compliance-ease-business-tax-reforms/

For eight years, the government ignored rising voices, especially Rahul Gandhi’s persistent calls to review the tax rates. Now suddenly, GST slabs are being reduced. The question is—why now?

Rahul Gandhi began questioning GST rates soon after the tax was introduced in 2017.

However, the Modi government refused to adjust or acknowledge the impact for nearly a decade. During this time, GST became a second tax monster—eating into savings and small business profits.

Middle-class families already pay income tax. But GST on essential items turned daily spending into a constant economic burden.

This wasn’t just a revenue issue. It was a quality-of-life issue. Savings fell. Small manufacturers suffered. Informal employment shrank. Entry-level jobs in local businesses started vanishing.

Despite government claims of “ease of doing business,” market reality said otherwise. Consumers spent less. Shops earned less. But billionaires? They earned more than ever.

From the beginning, GST was sold as a bold reform. But its design ignored India’s vast informal sector.

Multiple tax slabs confused small traders. Frequent compliance updates scared micro-businesses. Input credit delays choked working capital.

Despite repeated warnings from economists and opposition leaders, reforms stalled.

The government portrayed criticism as anti-national or anti-reform. Meanwhile, the ground reality worsened.

Every paisa paid in GST reduced consumer spending. That meant fewer sales, less profit, and more layoffs.

Small industries, especially in textiles, food, and manufacturing, reported major hits. Many shut down or scaled back. As a result, unorganized sector jobs declined sharply.

People didn’t always notice it in reports. But they felt it in daily life.

The economy didn’t improve overnight. Inflation remained high. But elections came closer. And public anger, once buried under propaganda, began to rise.

Rahul Gandhi’s long-standing criticism of GST gained traction. His focus on the tax’s impact on savings and jobs finally hit home.

Facing electoral pressure, the Modi government suddenly announced rate cuts. What they ignored for eight years became urgent within months.

Where Did the Money Go?

Tax policy in India, over the past decade, has made the rich richer. GST ensured that every purchase, no matter how small, contributed to the state—but not necessarily to the people.

The elite saw no impact. Their income and assets continued to grow. The rest of India bore the brunt.

A fair tax reform would have created transparency, simplicity, and progress. GST failed to do all three.

The structure favored large corporates who could hire compliance experts. Small shopkeepers, in contrast, were buried under paperwork and penalties.

If the recent rate cuts are genuine corrections, they must come with structural change—not just pre-election relief.

The GST reforms in India were launched as a revolutionary step. But the revolution forgot the people it was meant to serve.

By ignoring criticism for eight years, the government allowed economic inequality to deepen. Now that reforms have arrived, they must serve the people—not just please the headlines.

If a government can ignore pain for nearly a decade and act only under political pressure, it raises a serious question: Whose economy is this, anyway?