Impact of Reduced GST Rates on India's GDP Growth: A Sectoral Analysis

Abstract

The current field of study concerning taxation and growth mainly utilizes aggregate methods despite neglecting specific sectoral responses that result from tax modifications. Auerbach and Gorodnichenko (2012) along with Romer and Romer (2010) developed tax multiplier analysis methods yet they did not account for GST's multi-rate system dynamics which characterizes Indian emerging markets. Rao and Chakraborty (2013) and Poddar and Ahmad (2009) conducted India-specific research which mainly examined pre-implementation designing aspects and revenue consequences without studying post-implementation sectoral growth effects. The proposed research investigates indirect tax adjustments in India but also extends previous work by studying how different sectors react to these changes.