Modi’s tax overhaul to strain finances but boost image amid US trade tensions
Summary
Indian Prime Minister Narendra Modi announced India's biggest tax overhaul since 2017, cutting GST rates to reduce costs on essentials and electronics amid escalating trade tensions with the US. The reform aims to boost economic growth and improve Modi's political standing ahead of Bihar's state elections.
Key Points
- Narendra Modi's government announced the deepest tax cuts in eight years, reforming the GST to lower rates on essentials and electronics.
- The GST overhaul will reduce government revenues by approximately $20 billion annually but is expected to boost India's GDP by 0.6 percentage points over 12 months.
- The tax reform is politically motivated, aiming to improve Modi's image amid US trade tensions and ahead of critical state elections in Bihar.
- The US had hiked tariffs on imports from India to 50%, and trade talks between the two countries have been called off.
