Post-rate cut gains in GST collections remain limited to motor vehicles and select sectors, signaling subdued broader consumption.
India’s Goods and Services Tax (GST) collections show limited growth despite rate cuts in September 2025, with demand uplift concentrated in motor vehicles and a few categories. Stripping out refunds, net domestic GST growth remains tepid, reflecting uneven household spending trends.
Index of Industrial Production (IIP) data reinforces this divide, with consumer durables outperforming non-durables. In FY26, consumer goods production rose 2.45% year-on-year, driven entirely by durables, while non-durable output stayed flat, indicating persistent weakness in everyday consumption.
The data suggests demand recovery is skewed toward higher-income households, failing to lift broader economic activity. Analysts note the divergence between durable and non-durable trends as a key indicator of uneven demand.