GST reforms expected to ignite animal spirits in financial sector: DEA secy

Noting that recent uncertainties created by global tariffs have not impacted the Indian economy severely, Anuradha Thakur, secretary, Department of Economic Affairs, said the central government is hopeful that the recent goods and services tax (GST) rationalisation will ignite the much needed animal spirits in the financial sector.

- SUBRATA PANDA

THE FINANCIAL SECTOR, WHICH WAS PLAGUED BY THE TWIN BALANCE SHEET PROBLEM IN THE LAST DECADE, HAS MOVED TO BECOME MORE STRONG, INCLUSIVE, INNOVATIVE Anuradha Thakur, Secretary, Department of Economic Affairs

In September, the GST Council rationalised GST rates across various categories to stimulate consumption in the economy. Combined with the income tax relief provided to the middle class through higher exemption limits under the new tax regime, and the 100-basis-point cut in the repo rate that has made borrowing cheaper, bankers say these measures have resulted in green shoots in the economy. They aim to capitalise on this momentum in H2FY26 by expanding credit disbursal.

Speaking at a CII event in Mumbai, Thakur noted that the Indian financial sector has grown to be one of the most stable amongst emerging economies.

“The financial sector, which was plagued by the twin balance sheet problem in the last decade, has moved to become more strong, inclusive, innovative and now is a catalyst and reflection of India’s economic transformation”, she said.

Thakur said that this has been made possible due to several measures targeted at recapitalisation of public sector banks, strengthening NPA recovery mechanisms, and healthy resolution practices as well. The Insolvency and Bankruptcy Code (IBC) has also played a major role in this.