Former Union Finance Minister P Chidambaram has welcomed the government’s recent revamp of the Goods and Services Tax (GST) but stressed that the reforms, though significant, are not enough to address the broader economic slowdown. Speaking to India Today TV on Thursday, Chidambaram described the overhaul as a “necessary step, but not a sufficient step”, pointing out that while the changes would offer some relief, much more needed to be done to revive consumption and restore investor confidence.
The remarks came a day after Finance Minister Nirmala Sitharaman announced the biggest restructuring of GST since its introduction in 2017, introducing a simpler two-slab structure. Chidambaram said he was pleased that the government had finally embraced what the Congress had been advocating for years: that GST should be a “good and simple tax.” He welcomed Sitharaman’s recognition of this idea but cautioned against assuming that tax reforms alone would be enough to stimulate growth.
According to Chidambaram, the new rate structure could help mitigate the impact of weak domestic demand and offer some cushion against external shocks such as Donald Trump’s trade tariffs, but deeper reforms were still required. “This is the first step,” he noted, “but it is not a sufficient step.” He stressed that measures beyond taxation — particularly those aimed at boosting consumption and improving investor sentiment — were crucial if the government truly wanted to accelerate economic recovery.
A key focus of Chidambaram’s criticism was the complexity of GST laws. He argued that the system remains difficult to administer and overly burdensome for small traders and shopkeepers. “Nobody can fill the form without professional assistance,” he observed, highlighting how compliance has led to the mushrooming of tax professionals even in small towns. The former finance minister described the laws as cumbersome and unnecessarily complicated, creating an environment where even small traders with modest turnover find themselves dependent on external help.
He also raised concerns about the harsh enforcement of GST rules, drawing a parallel between the way GST is administered and the Enforcement Directorate’s handling of the PMLA (Prevention of Money Laundering Act). Chidambaram argued that tax violations should be treated as civil issues, not criminal offences. “You can’t threaten people with imprisonment, you can’t allow officers to arrest people at will,” he warned. Instead, he insisted that penalties for non-compliance should remain civil in nature, not punitive or coercive.
While acknowledging that GST 2.0 was a step in the right direction, Chidambaram made it clear that without simplifying compliance and making the law more trader-friendly, the reforms risked falling short of their intended goals. For him, genuine economic revival will require not only rational tax structures but also fair administration, easier compliance, and policies that encourage demand and investment.
