New Delhi, November 28, 2025:
India’s economy received a major consumption push following a sweeping GST rationalization initiative that slashed rates on nearly 200 essential and mass-use items to 5%. According to a Finance Ministry report released on Thursday, the restructuring delivered a “measurable” 8% surge in consumer spending, reinforcing the nation’s economic momentum amid persistent global uncertainties.
The revised GST slabs have collectively saved Indian households over ₹50,000 crore annually, said Finance Secretary Sanjay Malhotra, contributing to a 12% year-on-year rise in retail sales. The report, published shortly after the Q2 GDP data, projects India’s growth at 7.5% for FY26, supported by resilient domestic demand and moderation in input costs.
Despite challenges such as oil remaining around $75 per barrel, policymakers remain optimistic. Key reforms—including streamlined input tax credits and eased compliance norms—have significantly benefited MSMEs, with 1.2 crore new GST registrations recorded since the overhaul.
However, critics have raised concerns about a ₹20,000 crore revenue shortfall, questioning the fiscal sustainability of aggressive rate cuts. Finance Minister Nirmala Sitharaman dismissed the criticism, calling the reforms “pro-poor, pro-growth, and essential for long-term efficiency.”
The findings also align with the International Monetary Fund’s updated forecast, which recently revised India’s FY26 growth outlook upward to 7%, citing structural reforms and strengthening macroeconomic fundamentals.
