Some of the major benefits that the government highlighted on Saturday were attributed to the GST 2.0 reforms that were implemented on September 22. These included a sharp increase in sales, particularly of electronics and consumer goods; lower prices for essential everyday items; and an overall push to consumption that may even show up in the GDP figures for the fiscal year 2025–2026.
The government’s joint conference on “GST Bachat Utsav” highlighted the benefits of GST rate cuts reaching end-consumers, increasing purchases and driving investment, according to Finance Ministers.
Sitharaman emphasized that tax reductions are not limited to this season and consumption will continue. She attributed the rise in consumption to pent-up demand or revenge purchases, stating that better collections provide greater fiscal room for tax reductions, allowing for consumer benefits.
54 items are being closely monitored for tax benefits, with some items like Portland Pozzolana Cement passing at a lower rate than expected. All cement companies have reduced prices except for Portland variety and milk-related items, except for some brands.
The next-generation GST reforms replaced multiple slabs with a broad two-slab structure, including a merit rate of 5%, a standard rate of 18%, and a special demerit rate of 40% for sin and demerit goods.
India’s retail sales have increased by 20-25% compared to Navratri last year, with food prices decreasing due to GST reforms. Demand for electronic goods is increasing, impacting electronic manufacturing, which is growing at double-digit CAGR and employing 25 lakh people. India surpasses its neighbor in smartphone exports.
Vaishnaw predicts that India’s GDP will increase by over 10% this year due to GST reforms, resulting in an extra consumption of Rs 20 lakh crore compared to last year. This growth is expected in nominal terms, reflecting the natural increase in consumption as income and country growth grow.
The rise in consumption is expected to boost investments, bolstering growth momentum and highlighting the link between consumption and investment in the economy. The government predicts a 6.3-6.8 per cent GDP growth for 2025-26, but the upward trend of consumption, a key growth engine, is clear.
The Indian government has implemented GST reforms, despite criticism from the Opposition that they are a course correction. The government argues that the decision is a conscious decision, reflecting cooperation between the Central Government and the GST Council to provide greater benefits to the people. Commerce & Industry Minister Goyal praised the government’s decision to provide relief of Rs 2.5 lakh crore through both direct and indirect tax measures.
The Finance Minister of India has announced three GST reforms: rate cuts, slab reduction from four to two, and registration process simplification. These measures have resolved classification-related issues, reducing confusion and court time. Launched on the first day of Navratri, the reforms have been well-received by the Indian people.
