Nudging a Healthier Nation: A Behavioural Economics Framework for India's GST 2.0

Abstract: India stands at a critical juncture, facing a rising epidemic of non-communicable diseases (NCDs) linked to dietary habits. The current Goods and Services Tax (GST) regime, while a landmark fiscal reform, exhibits significant behavioural inconsistencies in its taxation of unhealthy food products, creating a confusing and ineffective public health signal. This paper argues for a "GST 2.0" reform, moving away from a blunt, category-based "sin tax" towards a sophisticated, nutrient-based model grounded in the principles of behavioral economics. By analyzing the shortcomings of the current system and drawing on international precedents, we propose a 4-tier, nutrient-based GST structure. This model acts as a powerful form of choice architecture, designed to nudge both consumers towards healthier choices and manufacturers towards product reformulation. The research synthesizes behavioral principles like salience, mental accounting, and default options to create a robust framework. The proposed hypotheses suggest that such a system will be more effective in altering consumption patterns and encouraging industry change than the status quo. The discussion concludes that a behaviorally informed GST 2.0 is not merely a public health intervention but a rational fiscal policy that offers a win-win for national health and economic well-being.Keywords: GST, Behavioral Economics, Choice Architecture, Sin Tax, Public Health, Nudge Theory, Food Policy, Salience, Mental Accounting, India.