GST Reforms to Put Nearly Rs 2 Lakh Crore Back in Public Hands

Union Finance Minister Nirmala Sitharaman announced that upcoming Goods and Services Tax (GST) reforms, effective from September 22, will channel nearly Rs 2 lakh crore back into the hands of consumers, stimulating domestic consumption and economic growth.

Speaking at the 80th anniversary of the Tamil Nadu Foodgrains Merchants Association here on Friday, Sitharaman highlighted the simplification of GST from four slabs to two, aligning with Prime Minister Narendra Modi's focus on benefiting the poor, middle-class families, and micro, small, and medium enterprises (MSMEs). This restructuring aims to reduce product prices, fostering a virtuous cycle of increased spending, production, and employment.

Sitharaman explained that the reforms would enhance market liquidity without reducing government revenue, as the Rs 2 lakh crore in foregone taxes recirculates through higher consumption. "When you buy a product like soap in larger quantities, manufacturers ramp up production, hire more workers, and generate income tax revenue alongside indirect taxes," she said.

This, she added, creates more jobs and broadens the tax base, with public spending driving demand, production scaling to meet it, and employment expanding accordingly. The minister emphasised that GST's introduction in 2017 has tripled the number of taxpaying entrepreneurs from 65 lakh to 1.5 crore over eight years, countering criticisms like Congress leader Rahul Gandhi's "Gabbar Singh Tax" label.

The reforms underscore Modi's commitment to equitable growth, particularly for vulnerable sections and MSMEs, which form the backbone of India's economy. Sitharaman dismissed accusations of prior over-taxation as "drama", asserting that neither the NDA government nor the Prime Minister has ever favoured exploitative policies. Instead, the changes reflect a deliberate strategy to lower costs on essentials, encouraging bulk purchases and industrial expansion. With GST collections reaching Rs 1.74 lakh crore in August 2025—the highest monthly figure—these adjustments are poised to sustain fiscal stability while empowering consumers.

Also Read: UAE Eyes Major Investments In India’s High-Tech And Startup Sectors

As India targets a $5 trillion economy, the GST overhaul positions the tax regime as a catalyst for inclusive development. Economists anticipate the slab reduction will curb inflation on daily goods, potentially lifting rural and urban spending by 5-7% in the coming quarters. Sitharaman's address in Madurai, a hub for foodgrain trade, resonated with local merchants, who stand to gain from streamlined compliance and lower input costs, further integrating Tamil Nadu into national economic reforms.

Also Read: Migrant Boat Sinks Off Libya, 19 Dead And 42 Still Missing