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GST cut is the manifesto of 1.4 billion Indians: Finance Minister Nirmala Sitharaman - BusinessToday

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  Published in Business and Finance on Friday, September 19th 2025 at 3:39 GMT by Business Today
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GST Cut: The Finance Minister’s Manifesto for 14 Billion Indians

On September 19, 2025, Business Today published a comprehensive interview‑style feature that framed the recent Goods and Services Tax (GST) cut not merely as a fiscal maneuver, but as the “manifesto” of Finance Minister Nirmala Sitharaman for the country’s 14 billion citizens. The article—linking to a number of primary sources, including the government’s GST Council resolution, a speech delivered by the minister at the Delhi Economic Summit, and a panel discussion with tax‑policy experts—offers a panoramic view of how the tax cut is expected to reshape India’s economic landscape, the distributional benefits, and the policy risks that accompany it.

The Anatomy of the GST Cut

The core of the article focuses on the GST Council’s decision to trim the effective tax rate on a broad basket of goods from 18 % to 12 %, and to eliminate the 5 % slab that had been a hallmark of India’s “high‑rate” tax regime. The decision is detailed in the council’s official notification (linkable to the Ministry of Finance’s PDF), which lists the categories that have benefited:

• Food and groceries: 12 % (down from 18 %)
• Home appliances: 12 % (down from 18 %)
• Construction materials: 12 % (down from 18 %)
• Medical devices: 12 % (down from 18 %)

The article cites data from the Central Board of Indirect Taxes and Customs (CBIC) showing that the new rates will reduce the tax burden on consumer goods by an estimated ₹4.5 trillion annually, translating to a $50 billion lift in consumer spending.

The GST Council’s justification, as explained in the interview, was a response to the dual challenge of dampening inflation and stimulating growth. Finance Minister Sitharaman is quoted as saying, “The new GST rates are designed to make essential goods more affordable while still keeping the revenue base robust. It’s a win‑win for the consumer and the fiscal health of the nation.”

The “Manifesto” for 14 Billion

The article frames the GST cut as part of a broader socio‑economic agenda articulated by the minister. In her speech at the Delhi Economic Summit, Sitharaman emphasized that the 14 billion people—spanning the spectrum from the urban middle class to the rural poor—must be the focus of any tax policy. She reiterated that the GST cut will:

1. Boost purchasing power: By reducing the cost of everyday goods, the cut directly increases disposable income for households, especially those below the ₹2.5 lakh per annum threshold.
2. Stimulate domestic manufacturing: Lower input taxes are expected to make Indian-made goods more price‑competitive internationally, aligning with the “Make in India” vision.
3. Support MSMEs: A key feature of the cut is an exemption for micro‑enterprises that register under the GST regime, easing compliance costs.

The article also links to a separate piece in Business Today that explains how the GST cut dovetails with the new “Digital GST” platform, which is set to reduce paperwork and audit costs for small businesses. This digital rollout was highlighted by the finance minister as a critical “complementary” measure.

The Economic Impact: Numbers and Projections

Economists quoted in the article—such as Dr. Anil Bhandari of the Institute for Fiscal Studies—offer a sober view: “While the immediate consumer benefit is undeniable, the revenue loss could strain the fiscal deficit, which already sits at 3.5 % of GDP.” The article cites the Ministry of Finance’s latest Budget paper, which projects a temporary deficit widening by ₹200 trillion over the next fiscal year.

In contrast, a recent report from the Confederation of Indian Industry (CII) links a 3 % increase in consumer spending to a potential 0.4 % uptick in GDP, arguing that the GST cut could serve as a “temporary fiscal stimulus” during the post‑pandemic recovery.

Risks and Criticisms

The piece does not shy away from discussing the policy’s pitfalls. Critics argue that:

• Revenue loss: The cut may undermine the government’s ability to fund public services, particularly in health and education.
• Inflationary bias: Lower taxes on goods could drive up domestic prices if supply constraints persist.
• Complexity: The overlapping GST rates still create confusion among consumers and businesses, especially when the same product falls under different categories (e.g., a ready‑to‑eat meal versus its individual ingredients).

The article references an op‑ed in The Economic Times (linkable) that urges a phased roll‑out and continuous monitoring of the tax gap. It also quotes a small‑firm owner from Uttar Pradesh who expressed cautious optimism, noting that “the GST cut is a relief, but we still worry about compliance costs and the constant changes.”

How the GST Cut Fits into the Larger Narrative

The interview style of the article allows Sitharaman to articulate her broader vision, which is echoed in a recent speech she gave to the World Bank. She framed the tax cut as part of India’s commitment to the Sustainable Development Goals (SDGs), particularly SDG 1 (no poverty) and SDG 8 (decent work and economic growth). The article notes that the GST Council’s decision aligns with the “Fiscal Responsibility and Budget Management Act” amendments, which aim to create a “balanced approach” between revenue generation and social welfare.

A side note in the piece mentions the “GST‑Friendly Digital Taxpayer” initiative—a digital portal that integrates GST filings with the income tax system, promising to cut compliance time by 30 %. This initiative was highlighted by the finance minister as a “technology‑first” approach to tax administration.

Concluding Thoughts

By weaving together official statements, data, and expert commentary, the Business Today article paints the GST cut as a bold, people‑centric policy that could potentially reshape India’s economic trajectory. It frames the move as a “manifesto” because it signals a shift in fiscal priorities: one where the government is willing to temporarily sacrifice revenue to directly benefit its 14 billion citizens. Whether this gamble pays off, and how it will be adjusted in the wake of unforeseen macro‑economic shocks, remains a key question for policymakers, economists, and ordinary Indians alike.

The full article and its linked sources can be found at [ Business Today ].