Global Lesson for India: Expect Pain Before Gain From Sales Tax
- Inflation typically rises in first year of implementation
- Consumption slows, but no clear trends in economic growth
A man uses a mobile phone while standing near flower garlands hanging on display at a flower market in Chennai, Tamil Nadu, India, on Thursday, Feb. 25, 2016. India must review its fiscal deficit targets in the coming years, Finance Minister Arun Jaitley's advisers said in a report before he presents the annual budget.
Photographer: Prashanth Vishwanathan/BloombergAs central bank Governor Raghuram Rajan assesses the economic impact of India’s landmark national sales tax, he’ll struggle to find countries that saw immediate benefits.
Rajan is expected to share his views on the goods-and-services tax, known as GST, when he reviews monetary policy for the last time on Tuesday. With implementation set for April 1, 2017, the sweeping new levy will replace a jumble of state taxes that inhibit trade.