RBI Article: GST Reforms Expected to Reduce Retail Prices and Stimulate Consumption

The Reserve Bank of India (RBI) stated that recent GST reforms, introducing a two-slab system of 5% and 18% from September 22, are expected to lower retail prices and boost consumption. Bank of Baroda estimates a net consumption gain of ₹0.7–1 lakh crore, about 0.2–0.3% of GDP in Q2 FY26. Coupled with repo rate cuts, income tax relief, and employment measures, the reforms aim to stimulate sustained consumption and investment growth despite global uncertainties. Strong corporate balance sheets and structural reforms support resilience. Q1 FY26 GDP grew 7.8%, and S&P upgraded India’s rating to BBB with a stable outlook.