GST rate cuts neutralised by inflation, says Jairam Ramesh

Congress leader Jairam Ramesh said on Monday that the effect of GST rate cuts on different goods is being cancelled out by rising inflation, noting that the policy has not spurred a widespread rise in consumption.

In a recent X post, the Congress general secretary for communications noted that the GST rate cuts announced in September 2025 were expected to give the economy a significant lift. He conceded the cuts were long overdue but warned that calling them a transformative step was an overstatement.

Ramesh asserted that the effect of the rate cuts on consumption has been uneven, with automobile sales seeing gains, whereas apparel sales have not responded in kind.

“The impact of GST rate cuts on various commodities is being neutralised by soaring inflation,” Ramesh said, adding that prices of many consumer goods have reverted to near‑pre‑cut levels within a year, without a notable rise in consumption.

He also cast doubt on the overall picture of India’s economic growth, arguing that headline quarterly GDP numbers may give a rosy impression while substantial challenges persist.

According to Ramesh, consumption is not buoyant across all income groups, private investment is not seeing a broad‑based boom, and real wages are falling. These constitute his political and economic assessments.

GST revenue from imports increased 29 per cent to Rs 62,604 crore, while domestic GST collections rose 9.3 per cent to Rs 1,37,249 crore, from Rs 1,25,570 crore a year earlier.

August’s overall GST collections were, however, lower than the Rs 2.11 lakh crore recorded in July 2026.

The latest GST figures show continued growth in tax collections, while Ramesh’s remarks centered on whether lower GST rates have translated into sustained price reductions and stronger demand.