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What's the real fiscal cost of GST reforms?
The New Indian Express Tadepalligudem
|September 14, 2025
WHEN the Finance Ministry undertook the task of GST rate cuts, it maintained that the exercise was a step towards easing the burden on common man rather than being too concerned about loss of revenue.
Yet, analysts and economists continue to huddle over the 'real' fiscal cost of the move.
The ministry has projected a revenue impact of ₹48,000 crore, but multiple economists and research firms believe the actual fiscal cost could be significantly higher—ranging between ₹1.5 lakh crore to ₹2 lakh crore.
As per the government estimate, the gross revenue loss is estimated to be ₹93,000 crore, which will be partially offset by additional revenue of ₹45,000 crore due to shift in goods from 28% slab to 40%.
The finance ministry's assessment is based on the FY24 consumption basket.
However, even government officials do sound too sanguine about these estimates.
Officials in the finance ministry maintained that their figures are conservative and based on historical data.
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