Since Union finance minister Nirmala Sitharaman's announcement last week that India's Goods and Services Tax (GST) rates will be rationalised anew from September 22, I've been seeing a flood of pieces all in praise — and why not?

The GST regime has been somewhat controversial since its launch because, despite simplifying compliance for businesses and industry, it increased the costs for consumers. The Indian government exacerbated that pain point by undermining the fiscal federalism of the Union, increasing its revenues at the expense of states' as well as cutting allocations.

While there is (informed) speculation that the next Finance Commission will further undercut the devolution of funds to the states, GST 2.0 offers some relief to consumers in the form of making various products more affordable. Populism is popular, after all.

However, increasing affordability isn't always a good thing even if your sole goal is to increase consumption. This is particularly borne out in the food and nutrition domain.

For example, under the new tax regime, from September 22, the GST on pizza bread will slip from 5% to zero. This means both sourdough pizza bread and maida (refined flour) pizza bread will go from 5% to zero. However, because there is more awareness of maida as an ingredient in the populace and less so of sourdough, and because maida as a result enjoys a higher economy of scale and is thus less expensive (before tax), the demand for maida bread is likely to increase more than the demand for sourdough bread.

This is unfortunate: ideally, sourdough bread should be more affordable — or, alternatively, the two breads should be equally affordable as well as have threshold-based front-of-pack labelling. That is to say, liberating consumers to be able to buy new food products or more of the old ones without simultaneously empowering consumers to make more informed choices could tilt demand in favour of unhealthier foods.

Ultimately, the burden of non-communicable diseases in the population will increase, as will consumers' expenses on healthcare, dietary interventions, and so on. I explained this issue in The Hindu on September 9, 2025, and set out solutions that the Indian government must implement in its food regulation apparatus posthaste.

Without these measures, GST 2.0 will likely be bad news for India's dietary and nutritional ambitions.