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GST Cuts Spark Festive Demand Rebound
24 Nov
Summary
- GST rate cuts aim to make prices affordable and stimulate demand.
- Consumer durables saw a rebound in demand during the festive season.
- Sustained demand growth depends on broader economic conditions.
The Indian economy is experiencing a notable rebound in consumer demand, largely attributed to significant GST rate reductions implemented in September 2025 under the 'GST 2.0' initiative. These cuts aim to enhance affordability across various goods and services, including essentials, housing materials, automobiles, and other services, thereby stimulating economic activity.
The festive season has shown early positive trends, with a pronounced increase in demand for consumer durables. This surge is partly driven by businesses stocking up in anticipation of GST-rationalized demand, leading to an accelerated expansion in manufacturing output in September 2025.
While the initial impact of GST rationalization, pent-up demand, and an early festive onset has been positive for September-October 2025, the long-term sustainability of this trend, particularly for high-value purchases, is yet to be confirmed. Further clarity will emerge from credit card transaction data and GST collection figures expected in late November and early December 2025.
