GST Reforms in India: Fiscal Resilience in a VUCA World

Abstract

India is the fastest-growing economy with immense growth prospects.  According to the World Bank, “India has achieved remarkable development over the past two decades. Since 2000, the economy has nearly quadrupled in real terms, and per capita income has almost tripled.”  According to the Forbes India report on the world's GDP rankings for 2025, India ranked 5th. Along this developmental trajectory, the multifaceted challenges inherent in a VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) world warrant careful consideration. In an increasingly interconnected global economy, disturbances in any country have worldwide repercussions, reinforcing a VUCA environment. In this VUCA environment, fiscal resilience is crucial for coping with such situations. The Government of India always made policy changes to strengthen Fiscal resilience. In this series of transformations, the implementation of Goods and Services tax (GST) in 2017 was also an important milestone, helping the country strengthen Fiscal Resilience in this VUCA world.

This paper explores the GST reforms' contributions to fiscal resilience in this dynamic economic environment. This study is descriptive and analytical in nature, based on secondary data from the Ministry of Finance (Govt. of India), GST Council, newspapers, Magazine articles, research papers, and analytical reports. The paper examines year-wise and state-wise GST contributions and analyses the policy changes in the special context of the VUCA world. Although the new generation GST 2.0 has simplified processes and reduced the number of tax slabs, there are still challenges, such as revenue shortfalls due to simplified tax slabs, compliance delays, and complexities and ambiguity arising from new technology and rule changes. But despite a few challenges, GST reforms have laid the foundation for fiscal resilience.