By Martin Shwenk Leade

Copyright indiatimes

ANIChief Economic Advisor

India’s Chief Economic Advisor (CEA) Anantha Nageswaran is confident that GST 2.0 will provide a very significant boost to domestic demand. He earlier expected a 0.4-0.5% reduction in India’s trend growth because of tariffs that year. With the new GST reforms in place, Nageswaran anticipates that the impact of tariffs may be lower. Speaking at the Network18 Reforms Reloaded 2025 summit in Delhi, CEA said that 0.4-0.5% reduction was expected from India’s trend growth of 6.5% this year, and 1% reduction was likely next year. “But now due to GST reforms, the impact may be lower,” he added.About tariff impacts on Foreign Direct Investment (FDI) in the economy, Nageswaran said that FDI will not be impacted in the medium to long term. “GST, deregulation may act as catalyst for higher FDI,” he said. “Even with additional tariffs, medium to long-term investment attractiveness of India will not be impacted.”Following the new GST reforms, he anticipates that India’s FY26 GDP growth will tend towards the upper end of 6.3-6.8 percent range in FY26Talking about the expectations of Q2 GDP statistics, Nageswaran said that he is hopeful that the Q2 GDP number remains close to the 7% mark. “The impact of US tariffs may be muted in the current year, but that will be compensated by GST rate reductions,” he said.Live Events”The GST 2.0 is a very significant landmark reform. I am very confident that it will provide a very significant boost to domestic demand,” Nageswaran said. “Coming on top of the indirect taxes are the concessions and relief announced as part of the Union Budget. Taking a multiplier effect, these will quite definitely boost the GDP numbers.”The chief economic advisor anticipated that the total impact of the multiplier effect due to direct and indirect tax relief on the economy will be more than Rs 2.5 lakh crore. However, some uncertainties may dilute the effect.When asked about the revenue impact of GST rate cuts on states, Nageswaran said despite prior rate cuts, the annual revenue collections of these states have gone higher up over the years. “The reduction in effective GST rate did not result in the decline in revenue,” he said.He added that he is confident of 4.4% of GDP gross fiscal deficit in FY26. “We had good non-tax revenue growth. Overall revenue growth has been on track. The festival season will continue till the end of the year. We are confident that the fiscal math will hold very well for the current financial year,” he said.Speaking about the government’s market borrowings, CEA Nageswaran said, “The Indian government’s market borrowings for the second half of the current financial year will remain unchanged.”India plans to borrow 14.82 trillion rupees ($167.87 billion) for the current financial year ending March 31, of which it is scheduled to borrow 6.8 trillion rupees in October-March.”We are confident of maintaining (the) fiscal deficit (target), the second half borrowing will be unchanged,” he said at the event.India has projected its fiscal deficit at 4.4% of GDP in 2025/26.Nageswaran said he expects the inflation trend to be benign until the end of the next calendar year.India’s retail inflation was 2.07% in August, and economists expect consumer tax cuts on food and household items to lower inflation in the coming months.Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our Economic Times WhatsApp channel)

Read More News onChief Economic AdvisorceaAnantha Nageswaranimpact of tariffgst reformsgst rate cutfy26 gdpForeign Direct InvestmentQ2 GDP

(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless

(You can now subscribe to our Economic Times WhatsApp channel)Read More News onChief Economic AdvisorceaAnantha Nageswaranimpact of tariffgst reformsgst rate cutfy26 gdpForeign Direct InvestmentQ2 GDP(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless

Prime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition123View all Stories