New Delhi, Aug. 29 -- On 15 August, Prime Minister Narendra Modi announced plans for a sweeping overhaul of India's goods and services tax (GST) regime. The proposal, to be approved by the GST Council, apparently involves collapsing the four-tier rate structure into two principal slabs-5% and 18%, with a separate 40% rate for sin and luxury goods.

While the reform is expected to immediately boost private consumption, its deeper significance may lie in its potential to solve a far more stubborn problem: India's decade-long decline in private investment.

This revised GST framework isn't just a sugar rush for consumption; it's a strategic move to create a virtuous cycle where robust demand finally tempts hesitant capital off the sidelines,...