India’s consumption recovery appears uneven and fragile, as recent improvements have been driven more by lower inflation, tax relief, and credit expansion than by strong wage growth. Rural demand has benefited from easing price pressures, while urban spending remains constrained by modest income growth and rising living costs. Increasing household debt and cautious consumer sentiment further highlight the structural weakness in demand. Sustainable consumption growth will depend on broad-based increases in real wages, better employment opportunities, and stronger household financial stability rather than temporary policy stimulus.
Click to View MoreIn October 2025, India’s Goods and Services Tax collections reached ₹1,95,936 crore, up 4.6% from the previous year, partly due to festive spending. GST, introduced in 2017, replaced multiple indirect taxes to create a unified system. While industrialized states like Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Haryana contributed over 40% of revenue, 20 states saw declines compared to pre-GST levels. Analysis shows that overall GST revenue remains lower than pre-GST taxes, with states like Mizoram and Nagaland improving collections, while Punjab, Chhattisgarh, Karnataka, Madhya Pradesh, and Odisha experienced significant drops.
Click to View MoreFiscal federalism in India is strained by shrinking state autonomy, centralization of revenues under GST, and rising cesses that narrow the divisible pool. To restore balance, the 16th Finance Commission must expand untied transfers, streamline CSS, and rebuild fiscal trust for equitable regional development.
Click to View MoreThe GST reform aims to simplify the indirect tax regime, reduce compliance costs, and address the inverted duty structure. Despite potential inflation and revenue concerns, this reform is crucial for tax administration, formalization, and cooperative federalism.
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