Question

A discussion of an economic policy area where the line between state and national control is not working.

Answer 1

We know that an economic policy is a course of action that is intended to influence or control the behavior of the economy. Economic policies are typically implemented and administered by the government. Policy makers undertake three main types of economic policy: Fiscal policy: Changes in government spending or taxation. Monetary policy: Changes in the money supply to alter the interest rate (usually to influence the rate of inflation). Supply-side policy: Attempts to increase the productive capacity of the economy. The objectives of economic policies are to achieve and include: Stable prices (low inflation) Steady and sustained economic growth. Low unemployment or full employment.

We know taxes fall under the fiscal policies of the government. There are two broad categories of taxes as direct taxes and indirect taxes. The state and central government is always on line in matters of the taxation in india and many other countries of the world. We know that taxes are a source of income for the govt. In india the GST tax was introduced in 1 July 2017 by the president of india. Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. GST is an indirect tax in india. It submerged all the taxes fallen in indirect tax category.

The launch of GST created a wide divide in the country. Some states were in favour and other states turned opposite to it. The states which have been provided with special stataus like Jammu and Kashmir, North- Eastern states did not implement it quickly like other states did. They were against it due to the reason that it will harm there identity atb the national level or will take away there status. The economic policy whatsoever made in the country should be for the betterment of the respective states as well. The view points of states should also be keep in consideration. The US, when formulating any economic policy should also keep in view the 50 states, which fall under its control.

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