When Prime Minister Narendra Modi appeared on national television at 5:00 PM on September 21, 2025, his words were wrapped in the language of hope, savings, and celebration. He promised the nation a new era of economic relief through GST 2.0, framed as a "GST Bachat Utsav," a festival of savings meant to usher in prosperity for millions of Indians as the sacred festival of Navratri approaches.
Yet beneath the festive metaphors lies a deeper, more intricate story: a carefully timed political and economic maneuver that may redefine the contours of India's governance, fiscal federalism, and electoral politics. Was this the Prime Minister addressing his people as the head of the nation, or as the undisputed leader of a political party locked in fierce battles on multiple fronts? The answer, like the reforms themselves, lies in the details.
A Bold Economic Stroke: Simplifying the Tax Web
For decades, India's tax system has been criticized for its complexity. The GST reforms announced by PM Modi represent the most ambitious restructuring since the tax's inception in 2017. By collapsing multiple tax slabs into a simpler framework of 5% and 18%, with a 40% demerit rate for luxury and sin goods, the government aims to simplify compliance, reduce distortions, and stimulate consumption.
The reform covers over 375 items, from essential goods to consumer durables. For the average family, this could translate into cheaper household purchases and reduced financial strain. The Prime Minister boldly claimed that the combined impact of GST changes and income tax relief would save Indians ₹2.5 lakh crore annually a staggering number, equivalent to nearly 1% of India's GDP.
On paper, this is a populist dream and an economist's challenge rolled into one. If implemented well, it could boost consumption during the festival season, improve business sentiment, and create a visible sense of relief for the middle class, neo-middle class, small shopkeepers, and MSMEs, all crucial constituencies ahead of several state elections, including the high-stakes contest in Bihar.
Timing Is Everything: Navratri and the Politics of Celebration
The reforms will take effect from September 22, the first day of Navratri. This is not just administrative coincidence; it is shrewd political choreography. Festivals in India are periods of heightened spending, community mobilization, and cultural pride. By aligning the reform with Navratri, the government seeks to frame the policy not merely as a tax adjustment but as a national celebration of prosperity.
In Bihar and other politically significant states, BJP and NDA leaders are already branding the rollout as a festival gift from the Prime Minister. Markets are being mobilized, shopkeepers encouraged to display discounts prominently, and outreach campaigns are underway. The visual spectacle of falling prices at the very moment families are making festival purchases creates a direct and emotionally powerful link between the government and the voter.
As a senior political strategist remarked off the record, "No campaign rally can match the impact of a family seeing lower prices on the very day they shop for Navratri. It's direct democracy through the wallet."
The Unspoken Costs: States Cry Foul
While the Centre celebrates, many opposition-ruled states are sounding the alarm. The GST is a shared tax between states and the Centre, and a large-scale rate cut threatens to erode state revenues. Several state finance ministers estimate potential annual losses of ₹1.5-2 lakh crore unless compensated.
The GST Council, which approved the reform, acknowledged these concerns by recommending a phased rollout and leaving the compensation cess issue unresolved. This sets the stage for a potentially bitter fiscal confrontation. States facing financial stress may accuse the Centre of centralizing power and using national policy for partisan gain, a narrative that could gain traction in India's already fragile federal framework.
For voters, this conflict may manifest as delays in welfare delivery or reduced state-level spending ironically undermining the very goodwill the reforms aim to create.
The Opposition's Narrative: Vote Theft and Electoral Integrity
The Prime Minister's speech was notable as much for what it didn't address as for what it did. Over the past two months, Rahul Gandhi and the Congress party have mounted an aggressive campaign alleging "vote chori" electoral manipulation through deletion of voter names and data tampering. These allegations strike at the very legitimacy of the democratic process.
In Bihar, Rahul's campaign has energized the INDIA bloc, framing the BJP not just as a rival but as a threat to democracy itself. By focusing on economic relief rather than directly rebutting these charges, Modi appears to be pursuing a counter-narrative: shift the public conversation from procedural integrity to tangible benefits.
However, the risk is clear. As one political scientist put it, "You can't buy back trust in institutions with tax cuts. If voters believe the game is rigged, economic incentives won't fully heal that wound."
Between Governance and Campaigning: Where Does This Address Sit?
Formally, this was a Prime Ministerial address to the nation. The language was inclusive, the policy nationwide. Yet the political undercurrents are undeniable. By blending administrative action with electoral timing, Modi has blurred the line between governance and campaigning.
This duality is not unprecedented. Leaders across the world from FDR's fireside chats to Barack Obama's Affordable Care Act rollout have used official platforms to cement political narratives. The question for India is whether this blending strengthens democratic responsiveness or corrodes institutional impartiality.
Market Euphoria and Operational Risks
Financial markets greeted the announcement with optimism. The Sensex and Nifty surged on expectations of a consumption boom. Industry bodies like CII and FICCI praised the simplification, while retailers began planning "festival sale" campaigns to pass on tax savings.
Yet beneath the euphoria lies operational risk. GST transition challenges misclassification disputes, invoicing glitches, and traders failing to pass on benefits could undermine public perception. The Central Board of Indirect Taxes and Customs (CBIC) has issued clarifications and helplines, but past experience suggests hiccups are inevitable. If consumers fail to see prices drop at the checkout counter, the narrative could quickly turn sour.
Global Context: A World Watching
Internationally, Modi's move is being observed with keen interest. At a time when the United States has raised H-1B visa fees, impacting India's IT sector, and global trade tensions are rising, India's domestic tax reform signals a determination to boost internal consumption and self-reliance.
The "Make in India" emphasis embedded in the speech sends a message to global investors: India is not just a market but a production hub. However, without parallel reforms in labor, infrastructure, and digital governance, GST alone cannot carry the weight of global ambitions.
The Road Ahead: Questions Unanswered
The true test of this reform will unfold over the next six months. Several questions remain unanswered:
Will states receive adequate compensation, or will fiscal federalism fracture further?
Can the government ensure real-time pass-through of tax cuts to consumers?
Will the opposition's focus on electoral integrity outpace the government's economic narrative?
Most critically, will voters see this as genuine governance or as strategic electoral choreography?
A Masterstroke or a Mirage?
Prime Minister Modi's GST address is a political and economic gambit of rare audacity. It offers tangible relief to millions, simplifies a complex tax regime, and positions the government as a benefactor at a culturally resonant moment.
But it also raises profound concerns about the health of India's democracy and its federal structure. By turning tax reform into a festival spectacle, the government risks conflating policy with politics in ways that may erode institutional trust.
As India heads into a turbulent electoral season, this speech will be remembered not only for the savings it promised but for the narratives it sought to reshape. Whether it will be hailed as a "Festival of Prosperity" or derided as a "Festival of Votes" depends on how the coming months unfold and on whether the Indian people see through the glitter to the reality beneath.
"A government is at its most powerful when it convinces its citizens not just to obey, but to believe."
In September 2025, Modi attempted precisely that. Whether belief endures will define India's political landscape for years to come.
[Major General Dr Dilawar Singh is an Indian Army veteran who has led the Indian Army's Financial Management, training and research divisions introducing numerous initiatives therein. He is the Senior Vice President of the Global Economist Forum AO ECOSOC, United Nations and The Co President of the Global Development Bank.]
