In numbers: How GST cuts signal economic boost

GST rate rejig could lower inflation and boost GDP despite fiscal deficit concerns

Sep 16, 2025, 14:29 IST1 min

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Assuming that the tax cut is fully passed down to the consumers, the GST cut is expected to bring down inflation by over 60 basis points and boost GDP over the next year. 2. Even as concerns about fiscal deficit persist, experts caution against premature assumptions of a revenue shortfall.

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Though revenue losses due to the revised rates are expected to be less than 1 percent of the GDP this year, GST revenues were expected to hit a record high previously.

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Many essential food and everyday items, which were experiencing a higher inflation print compared to the national average in July, will see a significant rate reduction

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The cut comes as a timely boost for urban demand, as consumption in India’s major cities and towns was showing signs of sequential recovery.

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Urban consumer confidence registered a slight uptick in July.

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While some states have raised the issue of revenue loss, a study by the State Bank of India suggests that states are expected to be net gainers after the rejig.

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