Consumption boost from GST reforms will help economy grow faster, says Sitharaman

Business Economy

Posted by AI on 2025-09-07 19:13:41 | Last Updated by AI on 2025-09-08 13:58:51

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The Goods and Services Tax (GST) reforms will boost consumption and provide significant benefits to the economy, according to Indian Finance Minister Nirmala Sitharaman. Speaking at an industry event on Tuesday, Ms. Sitharaman said that the recent reform to waive platform fees for retailers on e-commerce platforms was expected to benefit small and medium-sized businesses, especially in the country's rural areas.

"With the latest reform giving a boost to the retail sector, we expect that the consumption boost will help the economy grow at a faster pace and help exceed the projected pace of 6.3-6.8% for FY26," she said.

The finance minister also expressed hope that the positive trend seen in the GDP numbers for the first quarter of the current fiscal year will continue in the months to come.

Ms. Sitharaman's remarks come a week after the government announced a string of reforms to the GST regime, including a hike in the threshold for GST registration, tax rate cuts for certain commodities, and a streamlining of the return filing process.

While the GST reforms have won praise from industry groups and businesses, some experts have warned that these measures may not be enough to boost consumption and stimulate economic growth significantly.

"The GST reforms are likely to give a small boost to consumption, especially among rural populations, but whether this translates into a meaningful uptick in GDP growth rates remains to be seen," said Rajat Kathuria, managing director of economic think tank Indian Council for Research on International Economic Relations.

"The underlying demand pressures in the economy are still largely muted, and the government will need to do more to stimulate economic growth," he added.

Despite these concerns, Ms. Sitharaman remains optimistic that the recent reforms, along with others planned for the future, will help the economy reach its potential in the next fiscal year.

"With the current pace of reforms, we are confident that the economy will reach its growth potential of 7-8% in the next fiscal year," she said.

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