New Delhi, Oct 27 – India’s newest tax overhaul, GST 2.0, is already showing the kind of lift that economists have been hoping for. The Finance Ministry’s latest monthly review says consumption is stronger, sales are up across key industries, and shoppers feel more confident, all of which should push the economy forward in the coming months.
The lower tax rates that came into effect next to a busy festive season have spurred demand. Retail sales of passenger cars surged 34.8 % year‑on‑year during the Navratri holidays, as people bought new vehicles and upgraded premium models. Two‑ and three‑wheelers also rose 35.3 %, and tractor sales hit a record high in September thanks to good monsoon conditions and rising rural income.
In the manufacturing sector, consumer‑durable output grew 5.4 % in July‑August, compared with just 2.6 % earlier in the fiscal year, showing firms are producing more to meet the higher demand. Fast‑moving consumer goods (FMCG) sold even better: urban sales were steady at 4.1 %, while rural sales jumped 8.4 %, indicating strong purchase power in smaller towns and villages.
Digital payments are riding the wave, too. UPI transaction volumes and values jumped sharply in October versus September, a sign that people are spending more online, buoyed by the tax cuts and holiday optimism.
Economists expect this second‑quarter boom in FY 26 to continue. The recent GST rationalisation has cut taxes on essential and high‑value goods, keeping inflation moderate while encouraging people to spend. Even amid global trade uncertainty and higher U.S. tariffs on Indian products, domestic demand remains robust.
The uptick in activity has caught the attention of international and domestic financial institutions. The International Monetary Fund (IMF) now projects India’s GDP growth for FY 26 at 6.6 %, while the Reserve Bank of India (RBI) forecasts an even higher 6.8 %. Both banks see the tax reforms and holiday spending as key drivers of growth.
In short, GST 2.0 is turning out to be a successful policy pivot. Lower taxes are driving higher sales, creating jobs, and keeping the economy on a solid path toward stronger GDP growth and better consumer confidence.
Source: ianslive
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