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Key Points

Chief Economic Advisor V. Anantha Nageswaran believes GST reforms and the upcoming festive season will significantly boost domestic demand. He confirmed India remains the world's fastest-growing major economy with 7.8% GDP growth in Q1. While US tariffs pose short-term risks to exports, domestic consumption remains strong with private spending at a 15-year high. The government expects growth to stay within its 6.3-6.8% target range for the fiscal year.

Key Points: CEA Nageswaran Says GST Reforms Festive Season to Boost Domestic Demand

  • GDP grew 7.8% in June quarter exceeding expectations
  • Private consumption share highest in 15 years
  • US tariff impact remains uncertain short-term risk
  • GST 2.0 reforms could unleash Rs 5.5 lakh crore consumption boost
2 min read

GST reforms, festive season to boost domestic demand: CEA Nageswaran

India's Chief Economic Advisor V. Anantha Nageswaran expects GST reforms and festive demand to drive growth, despite US tariff uncertainties. GDP grew 7.8% in Q1.

"It is too early to gauge the precise impact of the US tariff on the Indian economy - CEA V. Anantha Nageswaran"

New Delhi, Aug 30

Chief Economic Advisor V. Anantha Nageswaran has said that the festive season and the Goods and Services Tax (GST) reforms could increase domestic demand in the upcoming quarters.

Short-term risks to economic activity, particularly exports and capital formation, remain due to uncertainties from the 50 per cent US tariff that was imposed on August 27, he said.

Nageswaran added that adequate domestic consumption would encourage private players to continue investing, even during challenging times.

Following the release of GDP data, which revealed a 7.8 per cent growth rate in the June quarter, exceeding expectations, Nageswaran said the growth is expected to stay within the targeted range of 6.3-6.8 per cent this fiscal year, as projected in the Economic Survey earlier this year.

He ruled out any revision to that growth figure, despite concerns over US tariffs. "It is too early to gauge the precise impact of the US tariff on the Indian economy," he said.

A senior finance ministry official said that manufacturing, construction, and services drove supply-side growth. Private final consumption expenditure grew by 7 per cent, and gross fixed capital formation increased by 7.8 per cent, which drove the demand-side growth. The government's capital expenditure also significantly contributed to investment growth.

Private consumption's share of GDP for the three months ending in June was the highest for that quarter in 15 years.

High-frequency indicators for July indicate that the economic momentum from the June quarter is continuing, according to CEA Nageswaran.

India not only remains the world's fastest-growing major economy, but also widened the gap with others, according to the latest data. China recorded a growth rate of 5.2 per cent in the June quarter, followed by Indonesia at 5.1 per cent, the US at 2.1 per cent, Japan and the UK at 1.2 per cent each, and France at 0.7 per cent.

A report from SBI Research earlier this month indicated that a consumption boost of Rs 5.5 lakh crore will generate an additional Rs 52,000 crore in GST revenue in FY26, easily offsetting the projected revenue loss of Rs 45,000 crore from GST 2.0 reforms.

GST 2.0 reforms could unleash a consumption boost, resulting in higher tax revenue, lower inflation, and higher growth, the report noted.

- IANS

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Reader Comments

P
Priya S
7.8% growth is impressive, but I hope this translates to better job opportunities for the youth. Growth numbers don't mean much if ordinary people aren't feeling the benefits in their daily lives.
A
Aditya G
GST 2.0 reforms making compliance easier for small businesses will be a game-changer. When small traders can focus on business instead of paperwork, that's when real growth happens! 🇮🇳
S
Sarah B
The US tariff situation is concerning though. We can't ignore external risks while celebrating domestic growth. Hope the government has contingency plans for export-dependent sectors.
V
Vikram M
Manufacturing and construction driving growth is excellent news! This creates so many jobs at various skill levels. Hope this momentum continues through the next quarters 🙏
N
Nisha Z
Private consumption at 15-year high for June quarter is really promising. Shows that despite inflation concerns, people are spending confidently. Good sign for the economy!

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