The Reserve Bank of India (RBI) stated in an article on Wednesday that the Goods and Services Tax (GST) reforms will lower retail prices and enhance consumption in the country.
Beginning on September 22, the government implemented a two-slab tax structure of 5 percent and 18 percent, eliminating the previous four-rate system.
According to the RBI’s ‘State of the Economy’ article published in the September bulletin, “The landmark GST reforms should progressively lead to a sustained positive impact through significant improvements in the ease of doing business, reductions in retail prices, and strengthening of consumption growth drivers.”
As stated in the RBI article, the transmission of front-loaded monetary policy easing measures has been robust. Since February of this year, the RBI has cut the repo rate by 100 basis points (bps). “With measures such as income tax relief for households and initiatives to boost employment in place, conditions are ripe for a sustained increase in consumption demand in the second half of FY26, which could lead to a virtuous cycle of increased investment and stronger growth impulses that can counteract ongoing global uncertainties.”
It noted that, in spite of global uncertainties stemming from the implementation of US trade tariffs, the Indian economy demonstrated significant resilience, as shown by a five-quarter high growth in the first quarter of FY26, driven by domestic factors. In the first quarter of fiscal year 2026, GDP growth reached a five-quarter peak of 7.8%, up from 6.5% in the same quarter of the previous year and 7.4% in January-March 2025.
“Although the introduction of high US import tariffs created some challenges for the domestic macroeconomic outlook, subsequent developments have highlighted the economy’s resilience. “The upgrade of the S&P sovereign rating was a recognition,” it stated.
With a stable outlook, S&P Global Ratings upgraded its assessment of India from BBB- to BBB last month. It characterized India as “among the best performing economies in the world.”
