GST rate cuts reaching common man, consumption & investments getting boost, say Union ministers

The GST rate cuts implemented last month have given a strong boost to demand for goods and services and investment sentiment in the country, aiding the government’s efforts to make the country more prosperous, union cabinet ministers said on Saturday at a press briefing about GST reforms.

Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal and Information and Broadcasting minister Ashwini Vaishnaw expressed confidence that businesses have reduced prices and that sales of goods have seen a sharp increase after the rate cuts.

Finance Minister Nirmala Sitharaman said that since 22 September, when the GST reforms comprising tax rate cuts, correction of inverted duty structure and simplification of procedures were rolled out, the government has been closely monitoring price trends of 54 daily-use items that the government wants to make sure are available at a lower price to consumers.

“Not in one case, has the benefit of tax reduction not been passed on to consumers,” Sitharaman said, expressing satisfaction at the pass-through of GST rate cuts into the prices of goods and services.

The minister added that there are, however, one or two items, like certain varieties of high-end cement from one or two brands, where the extent of price reduction due to the tax rate cut has not matched expectations because of the disparity in the tax applicable on the finished goods and on raw materials.

“We are convinced that GST rate reduction is actually reaching the common man,” Sitharaman said, referring to the list of 54 items being monitored.

The minister said, quoting auto sales figures, that the sector has been very vocal in its commitment to pass on the benefit of a tax rate cut to consumers as well as the increase in sales that businesses have witnessed. Sitharaman also said that in several cases, price reduction has been more than expected in view of the tax rate cut.

Commerce minister Piyush Goyal said the next-generation GST reform has lifted the spirits among people and in the markets. “Giving indirect tax relief to the tune of ₹2.5 trillion was beyond everyone’s imagination, and it will have multiplier effects on investment, trade and industry,” Goyal said.

‘Household consumption to add extra ₹20 trillion in FY26'

Ashwini Vaishnaw said that in FY25, household consumption accounted for ₹202 trillion while investments in plant, machinery and factories were about ₹98 trillion, out of the ₹330 trillion gross domestic output in nominal terms. This year, household consumption will have a significant increase and is expected to grow quite likely by over 10%. That would be an increase of ₹20 trillion crores in household consumption this year.

Vaishnaw said that the increase in demand for electronic goods is having a positive impact on electronics manufacturing. “It is rapidly expanding, and today it is giving employment to 25 lakh persons directly,” Vaishnaw said.

The festive and wedding season turnover is pegged to exceed ₹7 lakh crore, marking India’s biggest spending spree in years, said a person informed about discussions in the government on condition of not being named.

“Digital payments jumped tenfold overnight from ₹1.18 lakh crore on 21 September to ₹11.31 lakh crore on 22 September, as shoppers rushed to take advantage of GST savings. In cities like Delhi, festive sales are estimated at ₹75,000 crore, while Ahmedabad’s cotton fabric demand is up nearly 10% after GST cuts on garments under ₹2,500,” said the person.

“The government’s economic decisions have not just reduced costs, they’ve revived the festive economy, boosted local supply chains, and empowered made-in-India products to dominate markets again, added the person.

“From Onam to Navratri, India’s combined festive sales now make up 40–45% of the country’s annual retail consumption,” said the person, adding that momentum was still building up in view of Dhanteras and Diwali.