GST rate cut-induced domestic consumption seen blunting Trump tariff

 

India’s large domestic market can be used as an alternative to insulate exporters from the loss of business in the US market, and critical to this strategy is GST rate rationalisation, which can stimulate domestic consumption and offset the potential decline in export demand from the US. Experts say the Union Budget has provided additional money in the hands of the common people by hiking the income threshold for no Income Tax to Rs 12 lakh (Rs 12.75 lakh for salaried persons) under the new tax regime. Experts argue that a cut in GST rates would be the next logical step to boost this newfound purchasing power, especially in urban areas where consumption growth has been lagging. A GST cut would make a wide range of products, particularly consumer-heavy goods, cheaper, leading to increased spending and helping insulate the economy from external shocks, as per a report.

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