Reduced tax rates usually bring big smiles all around, as have the reduction of the Goods and Services Tax (GST) rates announced on September 3. But behind the smiles of the people, stands the great growth gamble of the Indian government. Lowering corporate tax rates, stepping up government spending on infrastructure and other incentive schemes have not triggered private investment in India in the past few years. Changing track, the government has unleashed a big demand push by lowering both direct and indirect taxes. In doing so, it has taken a substantial hit on the revenue side, endangering the fiscal health of the budget.
