Did a GST reset boost spending? Consumer surveys suggest not

Neither RBI's consumer confidence surveys nor Nabard's rural readings point to expenditure buoyancy after India's rate cuts

- NIKHIL GUPTA

The prices of various items such as footwear, clothing, consumer durables (such as air-conditioners and TV sets) and automobiles (cars, two wheelers, etc) have fallen post-GST rationalization. Our calculations suggest that inflation in India's GST-basket (weight of 17%) decelerated to 2.1% year-on-year in October 2025 and further to 1.8% in November from a stable 3% in the previous 14 months. Core inflation excluding gold was at a record low of 2.5% year-on-year in November, down from 3% in August-September.

The impact of GST rationalization, nonetheless, was expected to go far beyond lower inflation. It was supposed to put more money in the hands of consumers, addressing weak income growth, which was expected to convert into higher consumer spending and thus economic growth. In the absence of high-frequency official data on income and spending, various consumer surveys act as a crucial bridge to gauge current perceptions of these two key variables.