IndiaPosted at: Sep 21 2026 1:50PM


Inflation eroding GST cut benefits, Jairam Ramesh says, questions strength of consumption and investment

New Delhi, Sep 21 (UNI) Congress general secretary in-charge communications Jairam Ramesh on Monday stepped up his criticism of the Narendra Modi government’s economic policies, questioning whether the GST rate cuts announced in September 2025 had delivered the broad-based boost to consumption that was promised.
Ramesh said the rate reductions were “long overdue” but argued that describing them as “gamechangers” or “magic wands” had proved excessive, with their impact varying sharply across sectors. “The GST rate cuts in September 2025 were proclaimed to be gamechangers. They had, of course, been long overdue — but to boast of them as magic wands was hyperbole,” he said in a statement.
He pointed to automobile sales as an example of a sector that benefited from the tax reductions, while noting that apparel sales did not show a similar response. According to Ramesh, the contrasting performance indicated that the GST cuts had not resulted in a broad-based revival in consumer demand.
The Congress leader also argued that rising prices were progressively offsetting the benefits of lower GST rates. “In many consumer goods, prices have returned to nearly the pre-GST cut level within a year without any meaningful consumption increase,” he said.
Ramesh said the trend raised questions about the sustainability of the consumption boost expected from the GST reductions, particularly as households continued to face pressure from prices. He also challenged the broader economic growth narrative being projected by the government, arguing that headline quarterly GDP figures did not fully reflect underlying weaknesses in the economy.
“Headline quarterly GDP numbers may give momentary elation to the ruling establishment overlooking their imperfections, but there are many faultlines in the India growth story that are simply not being acknowledged by the PM and his brigade of cheerleaders,” Ramesh said.
He further contended that consumption was not buoyant across income groups and that private investment had yet to demonstrate the strength needed for a sustained revival. “Neither is consumption buoyant across income segments nor is private investment booming. Real wages are on the decline,” he said.
Ramesh’s remarks come amid the government’s continued emphasis on GST rationalisation and measures aimed at strengthening household demand and economic activity. The September 2025 GST changes were presented as a major rate-reduction and simplification exercise intended to lower the tax burden on consumers and businesses and stimulate demand.
Ramesh, however, argued that the subsequent trajectory of prices and consumption pointed to a more uneven outcome, with inflation, weak purchasing power and subdued investment continuing to pose challenges to the government’s broader economic growth narrative. UNI SKA AAB
Tags: #Inflation eroding GST cut benefits# Jairam Ramesh says# questions strength of consumption and investment
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