GST cuts on agriculture, essentials, and goods will lower costs, boost demand, and promote financial inclusion
Chennai
The Goods and Services Tax (GST) Council’s move to simplify the tax structure will make taxation more transparent and strengthen demand across key sectors, Indian Overseas Bank Managing Director and CEO Ajay Kumar Srivastava said on Sunday.
He noted that the shift from four slabs of 5%, 12%, 18% and 28% to just two rates — 5% and 18% — would make compliance easier and more predictable. “We expect these measures will drive consumption growth of 8–10% in the next two quarters, especially in rural areas,” Srivastava said in a press release.
According to him, farmers will benefit as GST on many agricultural products has been cut from 12% to 5%, reducing costs. Daily essentials like dairy and household items will also become cheaper, offering relief to families. Lower GST on vehicles, electronics, and housing materials is expected to stimulate demand in those sectors, while making insurance policies completely tax-free will push financial inclusion.
Srivastava added that the reforms would support wider economic growth by improving cash flows for retailers and distributors, enhancing working capital access for small firms, and expanding credit requirements across the economy. He emphasised that higher incomes and renewed investments would boost demand in retail, MSME, and agriculture segments.
Calling the GST decision a “catalyst for inclusive growth,” Srivastava said it aligns with the government’s vision of Viksit Bharat. He stressed that simpler taxation and fairer prices would not only benefit consumers but also provide stronger momentum for businesses and long-term transformation of the Indian economy.
