More than six decades after it achieved independence, India has yet to have a single internal market, with its economy divided up by state taxes on commerce.

That may be about to change, following the reversal by one of the biggest foes of a national sales tax ― Narendra Modi, the prime minister who took office in May. After opposing a goods-and-services tax during his 12 years running Gujarat state, Modi has pulled his ruling party behind the idea and plans to enact it within eight months.

Success would mean replacing more than a dozen types of tax that increase incentives for corruption, and offer the economy a boost of as much as 1.7 percent, according to the National Council of Applied Economic Research in New Delhi. Modi, who once said the levy was “impossible” to implement, now needs the revenue to trim a federal deficit.

“This is the easiest and most important reform for the new government to push forward,” Sudhir Kapadia, a partner for Ernst & Young LLP in India, said by phone. “There are huge leakages in the current system. With a uniform system, businesses will finally be able to make decisions purely on the grounds of profit.”

Modi is under pressure to raise revenue after keeping the previous government’s fiscal deficit target of 4.1 percent of gross domestic product in the year ending next March. A weak monsoon and rising oil prices threaten to inflate a subsidy bill that has risen fivefold over the past decade.

“I would not call it a flip-flop,” Aman Sinha, a spokesman for Modi’s Bharatiya Janata Party, said by phone of his position. “He is just executing a plan which the previous government failed to do.”

The Modi administration’s parliamentary mandate ― India’s largest in 30 years ― raises the likelihood of success where former Prime Minister Manmohan Singh failed. Passing the tax law would require votes in both houses of parliament, plus the support of 15 of the 29 states to amend the constitution. (Bloomberg)