Congress General Secretary in charge of communications Jairam Ramesh on Monday claimed that the impact of GST rate cuts announced by the Narendra Modi government was being offset by rising inflation, with prices of several consumer goods moving back towards pre-cut levels.
In a post on X, Ramesh said the GST rate reductions announced in September 2025 had been projected as a major boost to the economy. While acknowledging that the cuts were long overdue, he argued that portraying them as a “magic wand” was an exaggeration.
According to Ramesh, the impact of the rate reductions on consumption has been mixed. He cited automobile sales as an area that benefited from the cuts, while claiming that the apparel sector did not see a similar impact.
“The effect of GST rate cuts on various commodities is being neutralised by galloping inflation,” Ramesh said, adding that prices of several consumer goods had returned close to pre-GST cut levels within a year without a significant increase in consumption.
Ramesh also questioned the broader strength of India's economic growth, arguing that headline quarterly GDP figures should not be viewed in isolation. He claimed that weaknesses in consumption and private investment were being overlooked.
“Neither is consumption buoyant across income segments nor is private investment booming. Real wages are on the decline,” he said.
Meanwhile, official data showed that India's gross GST collections rose 14.8 per cent year-on-year to Rs 1,99,853 crore in August 2026, compared with Rs 1,74,116 crore in August 2025. However, the collection was lower than the Rs 2.11 lakh crore recorded in July 2026.
The increase in August GST revenue was largely driven by taxes collected on imports. Gross GST revenue from imports rose 29 per cent to Rs 62,604 crore.
Domestic GST collections also recorded growth, increasing 9.3 per cent to Rs 1,37,249 crore in August from Rs 1,25,570 crore during the corresponding month last year.
The latest GST collection figures indicate continued growth in tax revenues, while Ramesh's comments focus on the extent to which GST rate reductions have translated into lower consumer prices and stronger demand.
