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New GST system to hurt India's revenue: Moody's
India has announced a new GST system with two main tax rates—5% and 18%—plus a steep 40% for ultra-luxury buys, and for tobacco after December 31.
Moody's says this move should help people spend more by making things cheaper, but it also means the government will collect less money than before.
Fiscal deficit likely to widen
The goal is to keep prices in check and make everyday goods more affordable.
Still, Moody's expects the government to miss out on about ₹48,000 crore in revenue this year.
At the same time, government spending has jumped by over 20%, pushing the fiscal deficit up to ₹4.7 trillion.
With interest payments eating up nearly a quarter of revenue, Moody's warns that cutting down debt could get even tougher from here.