GST rate cuts fuel strong consumption growth across key sectors, Government data shows

By Shailesh Yadav

New Delhi [India], December 1 (ANI): Sectors that benefited from recent GST rate rationalization have registered robust growth, with consumption indicators showing a significant uptick in consumer spending across essential and mass-market categories, government sources revealed on Monday.

The taxable value of goods and services under GST grew by 15 per cent during September-October 2025 compared to the same period last year, nearly double the 8.6 per cent growth recorded in September-October 2024, sources told ANI.

The growth has been particularly pronounced in sectors where the GST Council implemented rate reductions as part of what the government has termed the "GST Bachaat Utsav" (GST Savings Festival), aimed at putting more money in consumers' hands.

Several key sectors showed marked acceleration in growth rates year-on-year.

Construction and infrastructure saw a dramatic turnaround, with cement and related items posting 19 per cent growth this year compared to just 2 per cent during the same period in 2024.

Automobiles registered strong gains across categories. Buses and passenger cars grew by 20 per cent in September-October 2025, up from 12 per cent last year. Goods carriers and other commercial vehicles jumped from 2 per cent to 12 per cent growth. Tractors expanded from 11 per cent to 17 per cent.

Pharmaceutical products nearly tripled their growth rate, rising from 5 per cent to 13 per cent year-on-year.

Prepared food items increased 17 per cent compared to 11 per cent in the previous year's corresponding period.

The leather industry saw growth accelerate from 9 per cent to 18 per cent, while medical devices expanded from 16 per cent to 19 per cent.

Some sectors showed mixed results. Textiles recorded 8 per cent growth compared to 12 per cent last year, which sources attributed partly to export market impacts. Two-wheelers and bicycles grew 18 per cent versus 23 per cent previously, possibly reflecting consumer preference shifting toward more affordable four-wheelers.

All other categories combined registered 28 per cent growth against 12 per cent in September-October 2024.

Government sources emphasized that the data validates the strategy behind the GST rate rationalization initiative. The intent was to empower citizens by reducing tax burdens on mass consumption items, thereby stimulating demand.

"In these sectors, the taxable value of supplies has seen significantly higher growth, confirming that lower GST rates translated directly into higher consumer spending," sources said.

They noted that since the figures represent value terms at lower GST rates, the actual volume growth would be even higher.

"It is clearly visible that while the Next Gen Reforms resulted in significant Bachaat - increased consumption, industry has been very proactive in passing on the GST savings to final consumers and ensuring that there is no supply side deficiency," sources added.

With official GDP private consumption data released with a considerable lag, the government views GST taxable value as the most reliable real-time proxy for consumption trends. The current numbers indicate sustained demand expansion across the economy, according to sources.

The government maintains that the reforms demonstrate a demand-side uplift effect similar to the Laffer Curve principle, where reduced rates on essentials and mass-use sectors create overall buoyancy in consumption.

Sources stressed that these trends confirm GST Next-Gen Reforms have not disrupted revenue stability, with consumption-side buoyancy translating into higher taxable values in key sectors despite lower rates. (ANI)

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