GST Reset Likely to Boost Demand Outlook
The Ministry of Finance has said that recent rationalisation of the Goods and Services Tax (GST) rates is expected to support domestic demand by reducing tax burdens for consumers and businesses. However, it cautioned that global uncertainties remain a downside risk to the growth outlook.
Impact of GST Changes
The ministry’s monthly economic review highlighted that lower GST rates — implemented as part of the so-called GST 2.0 reforms — should enhance consumption and investment across sectors. It noted that favourable monsoon conditions, lower inflation and improved liquidity further support this demand revival.
Risks and Outlook
Despite the positive signs, the ministry warned that external headwinds — including weak global demand and elevated trade tensions — could limit the rebound. The report stressed that structural reforms and strong demand must continue to support the economy.
