GST Overhaul Spurs Economic Confidence: Impact on GDP and Fiscal Balance

In an optimistic note for the economy, Finance Minister Nirmala Sitharaman expressed confidence that rising consumption would offset the projected Rs 48,000 crore shortfall in GST revenue, following recent tax cuts. She assured that public finances would remain stable, with GDP growth expected to benefit from these changes.

Sitharaman emphasized that the consumption surge, sparked by the landmark GST reforms and a robust first-quarter GDP growth of 7.8 per cent, could even push growth projections higher than the previously estimated 6.3-6.8 per cent for FY26. The GST Council's decision to approve a new tax structure, effective September 22, was highlighted as a significant step.

With the revised tax structure lowering costs on essential products from soaps to electric vehicles, the overhaul is deemed a 'people's reform' by Sitharaman. This reform is expected to impact all, from the poorest in the country to the rapidly growing sectors like real estate and services, ensuring inclusive economic benefits.