As per the report published by Standard Chartered Global Research, the new GST reforms introduced by the Central government will boost the GDP by 0.1 to 0.16 per cent and can also reduce inflation by 40 to 60 bps annually. The report published by the organisation the name “India- A timely GST cut”, also stated there will not be a loss of revenue due to the GST reforms, opposite to what was expected. It said that the worry that it will create fiscal issues must be eliminated since the timing of the reforms is right.
With a cautionary tone, it, however, stated that the authorities need to bring more clarity on cess collection to ease out the risk of fiscal slippage and problems caused to the exporters. The expert-backed study praising the timings of the reforms said that the introduction of the package before the festival season will boost consumption and also help ease the tariff burden from Washington. The process reforms that are introduced by the GST council are expected to make investments and business easier and efficient in the medium term, the report further highlighted.
It also stated that the introduction coming after half the year will reduce the impact of the reforms in FY26 and will be more prominent in FY27. The report also forecasted the growth in FY26 to be around 6.9 per cent. Since most of the reforms are done in the non-durable consumer goods category, the report said that inflation will go down by 40 to 60 bps every year, easing a lot of pressure on consumers as the non-durable consumer goods make up most of the CPI basket.
The headline inflation, however, is projected to be between 60-65 bps. Though experts have not forecasted any rate cut by the RBI, they have mentioned that the reduction in inflation might give some space for a 25bps reduction in policy rate by the central bank in future. A major relief forecast done in the report is regarding the revenue loss, which experts believe will be one-third of what the government had earlier suggested.
The Standard Chartered has projected a 60,000 crore revenue loss this year, including both the state and the centre, which is not more than 0.16 per cent of the FY26 GDP.
