GST Rate Cuts to Add 0.16% to India’s Growth, Ease Inflation

A recent report by Standard Chartered Global Research, “India – A Timely GST Cut”, suggests that reductions in Goods and Services Tax (GST) rates could provide a meaningful boost to India’s economy. The analysis estimates an increase in annual GDP growth by 0.1–0.16 percentage points and a moderation in consumer inflation by 40–60 basis points.

The report highlighted that revenue implications remain contained, with the Finance Ministry projecting a potential loss of about ₹48,000 crore—equivalent to 0.16% of GDP based on FY24 data. Despite this, the bank noted that fiscal deficit pressures (0.15–0.20% of GDP) will likely persist.

Since the tax cut took effect mid-year, the full economic benefit is expected to unfold in FY27, while FY26 GDP growth is forecast to remain at 6.9%. Standard Chartered pointed to uncertainties such as export tariffs that could temper near-term gains.

Overall, the GST cut is seen as a timely measure that could stimulate demand, enhance competitiveness, and provide a cushion against inflationary pressures.