Good news for Indian consumers and businesses! Recent GST (Goods and Services Tax) reforms are expected to boost the economy and encourage more borrowing from banks. As GST rates are being reduced on many everyday products and services, people will find things more affordable, and businesses will see new opportunities for growth.
Indian Overseas Bank’s MD and CEO, Ajay Kumar Srivastava, shares that these reforms will have a big positive impact on the economy. Distributors and retailers will enjoy better cash flow, small businesses will get easier access to working capital, and overall demand for credit will increase. He believes this move is a step toward inclusive growth and aligns with India’s vision of becoming a developed nation.
One of the biggest benefits of the GST reduction is the increased transparency in taxation, making it simpler to understand and follow. Srivastava also highlights that rural areas will see a big boost, with consumption expected to grow by 8-10% over the next two quarters. Farmers will particularly benefit, thanks to GST being cut from 12% to just 5% on agricultural supplies, leading to lower costs.
Daily essentials like dairy products, household items, and consumer durables will become cheaper, providing relief to consumers. The lower GST rates on vehicles, electronics, and building materials will stimulate demand in these sectors. Additionally, making insurance policies fully tax-free will help promote financial inclusion, giving more people access to financial products.
Industry experts like Sanjay Agarwal from CareEdge Ratings say that lower GST rates will lead to cheaper goods and services, boosting consumers’ purchasing power. This is good news for sectors like automobiles, electronics, and appliances, which will become more affordable for budget-conscious buyers. As a result, banks could see more auto loans, personal loans for electronics, and other credit increased.
Currently, loans for housing, vehicles, credit cards, and consumer durables make up a significant part of bank credits, with around 16.7% in housing loans and smaller shares in other categories. These reforms are likely to encourage more borrowing and spending, helping the economy recover and grow stronger.
In summary, GST reforms are set to benefit everyone—from farmers and consumers to small businesses and banks—by making products more affordable and opening up new growth opportunities for the Indian economy.
