Modi government’s GST cut, why is this good economics and good politics:

News India Live, Digital Desk: Economic Policies: Whenever the government takes a big decision like reducing tax, it has two aspects. One is its effect on the economy of the country and the other is its politics. Recently, the Modi government has reduced the rates of GST on many things, and experts believe that this decision meets both these parameters.

This is a step that will save some money in the common man’s pocket and the political land of the government will also be strong. Let us understand this decision in easy language how it is a combination of ‘good economy’ and ‘good politics’.

Why is this ‘good economy’?

There is a simple rule of economics – when people have more money to spend in pockets, they make more shopping. When shopping increases, the goods of companies sell more and they increase production. This causes the wheel of the economy to move around.

1. Reinnces on inflation: Inflation has been a major concern for some time. From food and drink items, their prices will come down due to reduced tax on everyday items. This will provide direct relief to the common man from inflation.
2. Demand will increase in the market: The festive season is at the door. In such a situation, when things are cheap, people will shop fiercely. Due to increasing demand in the market, there will be some life in the sluggish economy. This is exactly the same as the car has to be pushed a little to start, this GST cut can act like the same shock.
3. Small industries benefit: Lowering taxes on things like carton box and packaging will reduce the cost of small and medium industries (MSMEs). This will increase their profits and they will be able to invest more money in business, which can also create employment opportunities.

Now we understand why this is ‘good politics’?

The decision that any government takes has a political purpose, and it is natural.

1. Elections on elections: Assembly elections are going to be held in many states in a few months and after that there is a general election of the country. In such a situation, the decision to cut GST rates is directly to woo middle class and poor class. When the public gets relief from inflation, its inclination moves towards the ruling party.
2. ‘Feel-Gud’ Factor: This decision produces a ‘feel-good’ factor among the people. This creates an image of the government that understands the problems of the people and takes steps to overcome them. Creating such an image in the election environment is very beneficial for any party.
3. Answer to the opposition: The opposition is constantly besieging the government on the issue of inflation and unemployment. By cutting GST, the government has tried to snatch a big issue from the opposition’s hand. Now the government can say that it is making serious efforts to reduce inflation.

Overall, this deduction in GST rates seems to be a thoughtful step, which also has economic advantages and political benefits. This is a decision that will show its impact everywhere from the budget of the common man to the electoral politics of the country.