Reductions in Goods and Services Tax rates that came into effect on September 22 have led to record sales of automobiles, consumer durable goods and FMCG products during Navratri and the ongoing festive season, Finance Minister Nirmala Sitharaman said on Saturday, adding that consumer demand is expected to sustain sustainably even beyond the festive season.
“Demand will continue even after the festive demand. It will benefit consumers on a daily basis and for occasional purchases. The story of consumption will continue,” underlined the Minister of Finance.
While she did not give any estimates on the expected revival in the economy or consumption demand, she further noted that the festival season in India continues till Sankranti, which is in mid-January and consumption figures have to be awaited by then.
The economic survey predicted that the economy would grow between 6.3% and 6.8% this fiscal year. However, since the reduction in the GST rate, the Reserve Bank of India has revised its growth forecast upwards to 6.8% from 6.5% previously. The International Monetary Fund also raised India’s GDP forecast by 0.2 percentage points to 6.6% in 2025.
The minister also stressed that the reduction in the GST rate was independent of the US customs duty hikes and said the exercise had been going on for one and a half years.
She added that reductions in GST rate have been passed on to consumers in most cases and prices of 54 items are monitored by the Central Board of Indirect Taxes and Customs.
“We are confident that for each of these items, the benefits are passed on to consumers. We are confident that the rate change benefits ordinary people,” she said.
In fact, the price reduction for items such as shampoos, clinical diapers, table and kitchen utensils, toys like tricycles, solar cookers and umbrellas was slightly higher than the GST reduction.
In some cases, like in the case of butter, ghee and cheese, the part change is slightly less and the government engages with the manufacturers to discuss this.
There is also a smaller than expected reduction in the price of Portland cement.
The government received 3,169 complaints regarding GST rate cuts, of which 3,075 were referred to CBIC and 94 were resolved by the Ministry of Consumer Affairs.
Meanwhile, addressing the press conference, Ashwini Vaishnaw, Minister for Electronics and IT, Railways, Information and Broadcasting, said that the sales of electronic items during this Navratri were 20-25 per cent higher than last Navratri.
The increase in demand for electronic products has also helped electronics manufacturing, which has seen double-digit growth and currently employs 25 lakh people, he said.
Indian smartphone exports to the United States have surpassed those of China, he said, adding that 20% of smartphone manufacturing for the United States is now done in India.
Food inflation has also eased due to GST reforms, he said.
