Delhi Bans Rummy but Shuffles the GST Deck
The irony is too perfect. The Indian government banned online rummy, poker, and fantasy sports calling them “gambling,” thereby forfeiting nearly ₹20,000 crore in annual tax revenue. And yet, at the same time, it has embarked on its own gamble — GST 2.0 — giving up another ₹50,000–70,000 crore in revenues, all while running a fiscal deficit of 5.1% of GDP or about ₹16.85 lakh crore. When individuals gamble and lose, their household budgets collapse. When the government does, the entire economy pays the price.
The Fiscal Gamble
GST 2.0 has reorganized slabs into 5% and 18%, with luxury and sin goods taxed at 40%. The Centre estimates a direct shortfall of ₹48,000 crore, plus an additional ₹10,664 crore import-related IGST loss flagged by trade analysts. Opposition states warn of a hit as high as ₹2 lakh crore. As a share of the Centre’s net tax receipts, this is about 2.7%, and nearly 7% of its GST revenue. Bond yields are already twitchy, and rating agencies like Moody’s are skeptical that these tax cuts will magically heal India’s fiscal math.
Consumers vs Corporates
Companies have been quick to declare their generosity. Tata Motors cut car prices by up to ₹1.55 lakh. FMCG giants from HUL to Amul promised to reduce MRPs or increase grammage. Appliance dealers are already teasing festive discounts. But here’s the problem: there is no anti-profiteering watchdog. The National Anti-Profiteering Authority was dissolved in 2022, the Competition Commission of India stepped back, and the Finance Minister herself now says her ministry will monitor profiteering. In Germany, a temporary VAT cut in 2020 saw 70% of benefits passed to consumers because enforcement was tight. In India, the lack of oversight leaves plenty of room for corporate pocketing.
The Exporters’ Roulette
While Delhi celebrates cheaper fridges and shampoos, exporters are bleeding. Trump’s 50% tariffs hit $48.2 billion of Indian exports, about 55% of all goods sent to the U.S. Shrimp exports face a 15–18% drop, putting $5 billion at risk. Gujarat’s solar module exports of ₹10,000 crore annually could see ₹7,000 crore wiped out. Textile and jewellery hubs like Tiruppur, Surat, and Noida are already seeing layoffs. The government has floated a relief package, possibly ₹25,000 crore, with credit guarantees and liquidity support, but details are fuzzy and timelines uncertain.
The Political Economy of GST 2.0
The government has marketed GST 2.0 as pro-poor, pro-MSME, and pro-middle-class — a “Good & Simple Tax 2.0” for 140 crore Indians. The timing is deliberate: right before the festive season and crucial state elections. Opposition-ruled states are livid, warning of fiscal collapse and demanding five years of compensation. The Centre insists this is about affordability and Atmanirbharta, but the accountability gap is glaring. Without institutional checks, the promise of consumer relief rests on ministerial goodwill.
Comparative Lessons
China responded to U.S. tariffs with export VAT rebates, cushioning its factories. The European Union deployed retaliation and negotiation, not domestic tax cuts. Germany’s VAT cut showed consumer pass-through works when monitored. India has chosen the German path without the German watchdogs, and is dangling a future export package instead of China-style rebates. It’s a hybrid model with all the risks and little of the certainty.
Markets and the Rupee
The markets have not missed the gamble. The rupee slid to a record ~₹88.36 per dollar in September. Foreign investors pulled out $1.4 billion from equities that month. Bond yields hovered near 6.5% as traders fretted over government borrowing. Analysts warn the tariff shock could shave up to 1% off India’s GDP, compounding the risks of fiscal slippage.
Conclusion
After banning one gamble, the government has chosen another. If GST 2.0 truly sparks consumption, India may get its growth story back. If profiteering dominates and exporters collapse under Trump’s tariffs, the deficit will only widen. Delhi may have banned rummy, but with GST 2.0, it is the government that’s now shuffling the deck — and all of India holds the cards.
