GST 2.0: Axis report predicts shift from capex to consumption-led growth; MSMEs, consumer sectors seen as key beneficiaries
The government’s announcement of Goods and Services Tax (GST) rationalisation under GST 2.0 signals a major change in India’s economic approach, moving from capex-led spending to a consumption-driven model, according to a report by Axis Securities.“The government has now shifted gears from capex-oriented spending to consumption-led spending,” the brokerage said, adding that the February 2025 Budget had already started this transition by introducing tax reliefs for rural households and the middle class.
As per news agency ANI, the report noted that over the last decade, infrastructure projects like roads, bridges and metro networks defined government policy. However, GST 2.0, approved in the 56th GST Council meeting on September 3, marks a new phase aimed at boosting demand. The reforms rationalise the structure by reducing slabs from four to three, scrapping the 12% and 28% categories. Most items now fall under 5% and 18%, while a 40% slab is reserved for sin goods. Certain essentials have been placed under a Nil GST rate to directly spur consumption. These changes will take effect from September 22, coinciding with Navratri’s first day.
As per ANI, Axis Securities said the move is expected to benefit MSMEs and SMEs and revive credit growth, while boosting consumer demand in sectors such as durables, retail, FMCG, automobiles, cement, real estate, and building materials. The report added that higher discretionary income will strengthen the consumer discretionary segment, eventually reviving private capex, which has remained weak.Union commerce and industry minister Piyush Goyal also described the GST reforms as “game-changing” and the “biggest reform since independence,” reported news agency PTI. He said the move would support demand across sectors, benefit every consumer, and play an important role in India’s growth journey towards becoming a developed country by 2047.
“Every stakeholder in the country, every consumer, stands to benefit,” Goyal said, urging industry to pass on the benefits. He credited Prime Minister Narendra Modi for leading what he called the “biggest ever reform that India has seen since independence.”The minister added that the reforms, coming ahead of the festive season, are like a “Diwali gift” that will not only reduce taxes on daily essentials but also create a virtuous cycle of greater demand, investment, and job creation.
