The government has announced that new Goods and Services Tax (GST) reforms will come into effect from September 22, 2025, which are expected to inject about ₹2 lakh crore into the economy. The reforms include rate cuts and adjustments aimed at increasing disposable incomes for consumers—the idea being to give relief particularly to middle-income households, prompting higher consumption.
Apart from relief to consumers, this fiscal measure has broader macroeconomic implications. By increasing spending power in the hands of consumers, demand across sectors—especially retail, automobiles, consumer durables—is likely to see a stimulus. On the flip side, there’s some risk: reduced tax rates mean reduced direct revenue per unit for government, so maintaining fiscal discipline (keeping deficit targets etc.) will be under scrutiny.
