Business Desk – A new report by Standard Chartered Global Research says cutting Goods and Services Tax (GST) rates could help India’s economy grow faster and bring down inflation.
According to the report ‘India – A timely GST cut’, reducing GST could increase GDP by 0.1–0.16 percentage points annually and lower inflation by 40–60 basis points each year. The bank also believes the move will cause only a small revenue loss about 0.16% of GDP which may slightly widen the fiscal deficit but not severely impact government finances.
Standard Chartered says the GST revamp is well-timed, coming just before the festive season, which could boost demand and support growth. Process reforms, such as faster registration and refunds, are also expected to make doing business easier and help the economy in the medium term.
Impact on growth and inflation
GDP could rise by up to 0.16% in a year, though the effect in FY26 will be smaller as the cuts take effect mid-year.
Inflation could fall by as much as 60–65 basis points annually, especially in consumer goods. For FY26, the fall may be around 20–25 basis points, with the rest showing in FY27.
The Reserve Bank of India could get more room for a future interest rate cut if needed, though no cut is expected right now.
The government estimates the revenue loss will be about ₹48,000–60,000 crore for FY26, lower than experts feared. This smaller impact is because larger tax cuts are focused on small-ticket items like sweets and personal care products, while bigger-ticket goods see smaller cuts and some products will even have higher GST rates.
The report says it’s too early to worry about a wider fiscal deficit. Clarity is needed on income tax collections, GST cess beyond October, and any relief package for exporters affected by US tariffs.
