Recent GST rate cuts and festive season spending are expected to boost domestic consumption. These measures could counter global economic challenges and strengthen India’s growth this quarter. The Monetary Policy Committee (MPC) kept a neutral stance while watching tariff changes and GST rationalisation.

India’s growth projection for FY26 has risen to 6.8 per cent from 6.5 per cent. Inflation is now expected at 2.6 per cent instead of 3.1 per cent. High-frequency indicators like air passenger traffic, port cargo, and rail freight show slight slowdown. Meanwhile, diesel consumption, government spending, and bank credit have improved.

The Bank of Baroda estimated GST cuts and festive spending could raise consumption by Rs 12 lakh crore to Rs 14 lakh crore. Wedding-related expenses may contribute a large share. Strong domestic consumption keeps India as the fastest-growing major economy in the world.

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Other private lenders like Kotak Mahindra Bank and Axis Bank also recorded market cap losses. IndusInd Bank was the worst performer, losing 15.7 per cent and falling to the 14th position after reporting accounting lapses.

Public sector banks gained in the same period. SBI’s market cap rose 10 per cent. Canara Bank and Indian Bank gained 8.3 per cent and 16.7 per cent, respectively. Bank of Baroda and Punjab National Bank also reported moderate gains.

The government expects the economy to benefit from lower GST rates, festive demand, and normal rainfall. RBI raised GDP growth for FY26 to 6.8 per cent. Economists anticipate further rate cuts after two reductions in early 2025, supporting the banking sector.

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On the cricket front, the Abhishek-Gill show against Pakistan lit up Dubai on Sunday (September 22, 2025). Openers Abhishek Sharma and Shubman Gill produced a dazzling partnership that helped India secure another commanding win over their arch-rival. Chasing 172, India reached the target in just 18.5 overs with six wickets in hand. This victory came after their seven-wicket triumph in the earlier group stage clash. The performance underlined India’s dominance in T20Is, where the head-to-head record heavily favors the Men in Blue.

Shubman Gill played with authority while Abhishek Sharma added flair with his strokeplay. Together, they kept the momentum going throughout the chase, thrilling Indian fans and frustrating Pakistan’s bowlers. Analysts say the Abhishek-Gill show against Pakistan proves India’s batting depth and composure in high-pressure matches.

Globally, concerns are rising in South Korea. President Lee Jae Myung warned that the country could face an economic crisis similar to the 1997 meltdown if Seoul agrees to U.S. trade demands without safeguards. Talks with Washington remain tense, despite a July verbal agreement that included tariff cuts and major South Korean investment.

With these economic shifts and sporting highlights, today’s Morning Digest sets the stage for a busy week ahead.

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Around 99% of items currently taxed at 12% GST will move to a 5% rate. Similarly, approximately 90% of goods in the 28% tax bracket will now fall under 18%. This major rationalisation aims to make both essential and aspirational products more affordable for consumers.

Household staples such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice creams will see noticeable price reductions. Aspirational goods, including TVs, air conditioners, washing machines, and other home appliances, will also become cheaper. Several FMCG and electronics companies have already announced price adjustments to reflect the new GST rates.

Experts predict that the rate cut will encourage consumer spending and boost demand across sectors. For middle-class families and daily shoppers, the GST reduction means savings on everyday purchases, while for aspirational buyers, it lowers the cost of high-value items.

The GST rationalisation is expected to have a broader economic impact, improving affordability, enhancing consumption, and stimulating market growth. Consumers can look forward to more accessible products and better value for money across India.

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He highlighted government efforts to improve ease of doing business and manufacturing. New industrial cities, a logistics policy, and decriminalisation of minor offences were cited. Certain sectors, like automobiles, have started reducing prices, showing early GST benefits. The government aims to strengthen trade ties through free trade agreements.

Businesses have been directed to display tentative price lists for goods, including cars and consumer durables. This ensures consumers see the impact of the new rates. Retailers and dealerships must display both pre- and post-GST prices to ensure transparency. The CBIC held meetings with ministries and industry associations for smooth implementation. Consumer durables are expected to drop by at least 10 per cent, while automobile prices could fall 12–15 per cent under the new GST regime.

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Chidambaram stated that GST reform should have been logical from the start in 2017. He said repeated appeals from the opposition were ignored. According to him, the timing of the move could be linked to slowing growth, rising household debt, shrinking savings, upcoming Bihar elections, or even trade war fears with former US President Donald Trump.

On the other hand, Finance Minister Nirmala Sitharaman recently announced major GST changes at the 56th Council meeting. From September 22, the four-tier GST system will be replaced with two slabs — 5% and 18%. This comes just ahead of Navratri.

As part of the new GST reform, essential items like soaps, shampoos, toothpaste, and talcum powder will now fall under the 5% slab instead of 18%. Everyday goods such as bicycles, utensils, and milk bottles will also become cheaper. Basic food items, life-saving cancer drugs, and health insurance will be fully exempt from GST.

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