Paper short abstract:

Direct taxes are good for civic growth and democratic politics. However in India, the world’s largest democracy and fourth largest economy, it is indirect taxes rather than direct taxes that have increased. What are the implications for its politics?

Paper long abstract:

India, the world’s largest democracy and fourth largest economy, relies on indirect taxes, rather than direct taxes, for its tax revenue. The current contribution of direct taxes to its Gross Tax Revenue (GTR) has fallen nearly 5% and indirect taxes have steadily risen to the current figure of 45% of GTR in 2024. Scholarship on the interlinkages between democratic politics and taxation policy however show that direct taxes are better for civic growth and democratic politics. What does impact does India's dominant indirect tax regime thus have on its democratic politics?

Based on fieldwork conducted with Dr. Pavithra Suryanarayan (LSE Government) new research investigates the impact of a major new indirect tax introduced in 2017, the national Goods and Services Tax (GST) on business and politics. The introduction of GST created new flows of taxation of business payments to an automated central digital platform (GSTN) and a centralised GST council, replacing a more personalised previous system of interactions with federal bureaucrats and other businesses.

This paper will investigate how GST has created new individual and social subjectivities about taxation, the social contract, the ‘ease of doing business’ and a new anti-federal taxation system - and their impact on democratic politics.