The Congress said on Monday (September 21, 2026) that the impact of GST rate cuts on a range of commodities was being eroded by “galloping inflation”, with prices of several consumer products returning to pre-cut levels within a year.

Congress general secretary (communications) Jairam Ramesh, sharing a media report on the issue, said the GST rationalisation announced in September 2025 had been “long overdue”, but its impact on consumption had been uneven.

“The GST rate cuts in September 2025 were proclaimed to be game changers. They had, of course, been long overdue — but to boast of them as magic wands was hyperbole. In fact, their impact on boosting consumption has been mixed at best. For instance, automobile sales benefited while apparel sales did not,” Mr. Ramesh said in a post on X.

“Now comes evidence that the effect of GST rate cuts on various commodities is being neutralised by ‘galloping inflation’,” he said.

The prices of several consumer goods had returned to nearly pre-GST cut levels within a year without any significant increase in consumption, Mr. Ramesh claimed.

He also linked the issue to the broader state of the economy, questioning the narrative around India’s growth based on headline GDP figures.

“Headline quarterly GDP numbers may give momentary elation to the ruling establishment overlooking their imperfections, but there are many faultlines in the India growth story that are simply not being acknowledged by the PM and his brigade of cheerleaders,” he said.

“Neither is consumption buoyant across income segments nor is private investment booming,” Mr. Ramesh said, adding that real wages were declining.

The State Bank of India (SBI) in its latest research report said reforms in Goods & Services Tax (GST) through reduction in rates will cause a minimal revenue loss of ₹3,700 crore.

The government estimates the net fiscal impact of GST rates rationalisation will be ₹48,000 crore on an annualised basis.

Editorial | Cuts in time: On the new GST system 

According to the report, given the growth and consumption boost, the minimal revenue loss is estimated at ₹3,700 crore and will have no impact on the fiscal deficit.

At the 56th meeting of GST Council held few days ago, the current four-tier structure has been replaced with a two-tier one, with a standard rate of 18% and five per cent, and de-merit rate of 40% on selected few goods and services.

The report said the GST rate rationalisation will largely have a positive impact on the banking sector owing to meaningful cost efficiencies.

GST Council meeting highlights: GST cut on drugs, medical devices will provide relief to patients, says healthcare industry

“GST rate rationalisation has also brought down the effective weighted average rate from 14.4% at the time of inception in 2017, which is expected to come down to 9.5%,” the report said. When GST was introduced, the four rates were five per cent, 12%, 18% and 28%.

“Since the GST rate rationalisation of essential items (around 295) has declined from 12% to five per cent or zero, the CPI inflation in the category may also come down by 25 basis points to 30 basis points in the current financial year,” the report said.

“Overall, the CPI inflation may be moderated in the range of 65 basis points to 75 basis points over 2026-27,” according to the report.