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GST 2.0 implementation a ‘festival of savings’, first step towards economic self-reliance, PM says in address to nation

Hours before the new two-slab Goods and Services Tax (GST) regime is about to be rolled out at midnight on Sunday, Prime Minister Narendra Modi termed it a “bachat utsav”, a festival of savings, and the first step towards “aatmanirbharta” or economic self-reliance for Indians.

In a televised broadcast to the nation, Modi drew connections between the simplification of the GST regime from a four-slab to two-slab system, ease in compliance, and the reduction in prices resulting from it to a larger point about the need for Indians to weed out foreign-made products from their everyday life, and adopt products made in India, boosting the country’s Micro, Small and Medium Enterprises (MSMEs).

“Garv se kaho yeh swadeshi hai aur main swadeshi khareedta aur bechta hoon (be proud to say you are swadeshi, and buy and sell swadeshi goods),” Modi said, adding that, in the past, when India was a prosperous nation, it was on the strength of the world-class commodities produced and traded by it.

The address to the nation by the Prime Minister also comes in the backdrop of punitive trade tariffs by the U.S., and a troubled trade outlook.

Modi described the next generation GST reforms, along with with Income Tax exemption of up to ₹12 lakh per annum for individuals, as a double bonanza for the middle and neo-middle class of India, stating that it would lead to savings of nearly ₹2.5 lakh crore in households because of cheaper goods. He termed it his government’s “nagarik devo bhava” (citizen is akin to god) attitude in public policy.

“On the first day of Navratri itself, the country is taking its first steps towards aatmanirbharta,” the PM said. He went on to describe the decision to adopt a GST regime in 2017 after considerable discussions with stakeholders, and with all State governments on board. He appealed to State governments, too, to adopt the policy of encouraging the manufacture of Indian goods. He provided details of how four slabs in GST had been reduced to two, with many daily use goods, which earlier attracted a tax of 12%, now in the 5% slab.

“I am happy that our traders and the MSME sector has welcomed the GST next generation reforms. My expectation from the MSME sector is to recall that the basis of India’s past prosperity has been the excellence of its manufacturing, especially of the MSME sector, and adopt the attitude to regain that space and reputation for world-class goods,” Modi said.

An appeal to boost domestic consumption was also made by the Prime Minister, who said that his government had, over the last 11 years, lifted 25 crore people from below the poverty line. “This neo-middle class and the middle class that has been given Income Tax exemption will be saving ₹2.5 lakh crore through these reforms, but everyone has to remember that the goal of Viksit Bharat (developed India) can only be reached via self-reliance. Over the last few decades, foreign products have crept into many of our everyday objects of use, and we need to replace these with our own products,” Modi said.

Prime Minister Modi had first announced the Union government’s intention to undertake a reform of the GST regime during his customary Independence Day address from the ramparts of the Red Fort in New Delhi. In September, the GST Council cleared the two-slab regime.