GST Cuts Without Watchdog Risk Corporate Windfalls
India’s sweeping GST 2.0 reforms were announced with the promise of cheaper goods and services, from soaps to insurance premiums. Economists and analysts immediately began calculating how much this would bring down inflation, which sectors would get a boost, and what kind of stimulus it could deliver to the broader economy. Before those numbers could even settle, however, came Finance Minister Nirmala Sitharaman’s interview—and it dropped a bombshell. She revealed that with the National Anti-Profiteering Authority wound up back in 2022, it would now be her ministry acting as the watchdog. She declared that the CBIC and even Members of Parliament would be tasked with monitoring MRPs to ensure that companies pass on the benefits of tax cuts to consumers.
The absence of the National Anti-Profiteering Authority is not a small detail—it is the missing keystone in the GST 2.0 framework. The NAA may have been imperfect, but it was at least a deterrent. It could investigate, order refunds, and publicly name companies that failed to pass on benefits. Its closure left profiteering complaints scattered across the Competition Commission of India and tribunals, bodies not designed to handle day-to-day pricing checks. Now, what remains is a patchwork promise of monitoring by ministries and politicians.
The Finance Minister insists that benefits will reach the common man. The government’s solution is administrative vigilance: the CBIC will track MRPs, MPs will monitor ground realities, and industries are being told to commit voluntarily to price corrections. But voluntary commitments are not obligations, and in the world of corporate strategy, voluntary almost always means optional. Without a body with legal teeth, enforcement remains more rhetoric than reality.
History gives us reasons to be skeptical. In 2017 and 2018, when GST rates were first cut, many companies responded by tweaking base prices while keeping MRPs unchanged. Hindustan Unilever’s ₹495 crore profiteering case was proof of how easily industries could pocket tax benefits if unchecked. Even when companies were ordered to pay up, refunds rarely made their way back to consumers. Instead, they were pushed into the Consumer Welfare Fund, a reminder of how weak the pass-through mechanism truly was.
Meanwhile, the stock markets have already delivered their verdict. Shares of FMCG, auto, and consumer durable companies surged in the wake of GST 2.0 cuts. For corporates, the reforms are a golden ticket: they can widen margins, fuel stock rallies, and present themselves as beneficiaries of government reform. For the government, there is a projected revenue shortfall of ₹480 billion. For the consumer, the benefit depends on whether prices really drop at the checkout counter—or whether corporate India quietly eats the gains.
The consumer’s dilemma is stark. Without clear price reductions, the GST 2.0 promise risks becoming another paper reform. MPs as price police make for good political optics, but it is unlikely they can enforce compliance in supermarkets and malls across the country. In the absence of legal penalties, why should companies voluntarily slash margins?
GST 2.0 is bold, but incomplete. It needs a revived and reimagined anti-profiteering framework—leaner, more transparent, and time-bound—to ensure accountability. Without it, the government’s reforms may become a case study in how to give corporates windfalls while leaving ordinary citizens waiting at the cashier’s counter for discounts that never come.
