The recent reforms to India’s Goods and Services Tax (GST) are crafted not merely as tax tweaks but as a strategic push to stimulate consumption and accelerate growth. The government has transitioned from a four-tier structure to a proposed two-slab system (5 % and 18 %), while reserving a 40 % rate for luxury or “sin” goods. 

Key outcomes expected include:

• Lower consumer prices: Everyday goods like soaps, snacks, electronics and small cars have seen or will see rate reductions—boosting affordability and consumption.
• More disposable income: Reduced tax burden on essential and durable goods leaves the household with more spending power, which in turn stimulates demand and supports sectors like FMCG, automobiles and consumer durables.
• Simplified business process: Faster refunds, streamlined slab structure and better compliance reduce drag on businesses—leading to improved productivity, investment and downstream consumption.

Analysts estimate the reforms could lift GDP growth by 0.5-0.8 percentage points, and boost consumption by significant Rs lakhs-crore over the near term.