970x125
The Goods and Services Tax (GST) reforms will ease retail prices and boost consumption in the country, the Reserve Bank of India (RBI) said in an article on Wednesday.
970x125
Starting September 22, the government has introduced a two-slab structure of 5 per cent and 18 per cent, abolishing the earlier four-rate tax regime.
“The landmark GST reforms should progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers,” RBI’s ‘State of the Economy’ article published in September bulletin said.
According to a recent report by Bank of Baroda (BOB), the net gain to consumption is expected to be around Rs 0.7-1 lakh crore, which amounts to close to 0.2-0.3 per cent of GDP from the second quarter of the current fiscal.
The RBI article said that the transmission of the front-loaded monetary policy easing measures has been robust. The RBI has reduced the repo rate by 100 basis points (bps) since February this year. “Coupled with income tax relief for households and employment augmenting measures, the stage is set for a sustained pick-up in consumption demand in H2 (second half of FY26) and potentially for a virtuous cycle of higher investments and stronger growth impulses, overcoming persistent global uncertainties.”
“Healthy corporate balance sheets and the focus on structural reforms by the government are the bright spots of the economy,” it said.
The article has been prepared by the central bank’s officials. The RBI said that the views published in the article are of the authors and not of the institution.
Story continues below this ad
It said that despite global uncertainties due to the imposition of US trade tariffs, the Indian economy exhibited marked resilience as evident from the five-quarter high growth during the first quarter of FY26, propelled by domestic drivers. In Q1 FY26, GDP growth rose to a five-quarter high of 7.8 per cent, compared to 6.5 per cent in the year-ago period and 7.4 per cent in January-March 2025.
“While the imposition of high US import tariff brought in some headwinds to the domestic macro-outlook, the developments since then have underscored the resilience of the economy. The S&P sovereign rating upgrade was an acknowledgement,” it said.
Last month, S&P Global Ratings upgraded its assessment of India to BBB from BBB-, with a stable outlook. It described India as “among the best performing economies in the world”.
© The Indian Express Pvt Ltd
970x125
