GST reforms, Rate cuts could boost GDP by 0.16% and lower CPI inflation, says Standard Chartered

Standard Chartered’s report indicates that GST cuts could enhance GDP by 0.1-0.16 percentage points and reduce inflation by 40-60 basis points. The fiscal deficit may face pressure, but the overall revenue loss is expected to be limited, aiding growth ahead of the festival season.

Good and services tax (GST) rate cuts could boost GDP between 0.1-0.16 percentage points (ppt) and lower inflation by 40-60 basis points (bps) on an annual basis, according to Standard Chartered Global Research.

In its report titled ‘India – A timely GST cut’, Standard Chartered said that there will be limited revenue loss due to GST cut, which could “soothe fiscal worries”, adding: “we still see pressure (0.15-0.20 per cent of GDP) on the combined fiscal deficit”.

The report further added that there is need for clarity needed on direct tax / GST cess collection, and the fiscal support to exporters, in order to assess the risk of slippage.