GST Council: Collective brainstorming and lessons for the broader economy

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After much deliberation, the GST Council decided to slash taxes on a number of essential items such as medicines, devices, consumables, and even ambulances to provide relief to the common man. The tax on some medicines has been reduced to zero despite the Union finance minister arguing against it on social media earlier. However, the council has not listed vaccines among the items that would undergo a reduction in GST rates. Though the step could have been taken earlier, the way the council adopted consultations to reach a decision on a contentious issue throws up a larger possibility.

After the meeting on May 28 of the GST Council failed to arrive at a consensus with some states pushing for zero-rating of all Covid essentials, the Union finance minister formed a group of eight ministers from different states who were mandated to take a final view on the rates of taxes that would be applicable on the items. The GoM was given 10 days to hold consultations between them and come up with final recommendations.

The process went through the grind of the federal machinery that this country embodies with a member also pointing out that that the group did not feature anyone who was advocating a waiver of taxes of the essential items.

But the mechanism underscored the significance of putting heads together to solve vexatious problems of the economy. The model could perhaps be adopted for drawing on the expertise of the different state governments to address the central question of the economy – how to restore the economy to its growth path. The Centre might think of engaging the economic think tank of the different governments in wide and deep consultation to tackle the burning problems of rising unemployment and falling incomes that are threatening the India growth story. This is the time to quit the beaten track.