Will GST Rationalisation Boost Manufacturing Output in September-October?
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Synopsis
As the festive season approaches, the recent GST rationalisation is expected to significantly enhance consumption demand, positively influencing manufacturing output in September-October 2025. With older inventories cleared, economists anticipate a revival in domestic demand, bolstered by favorable economic conditions and government initiatives.
Key Takeaways
- GST rationalisation aims to increase consumption demand.
- Manufacturing output is expected to rise in September-October 2025.
- IIP growth was recorded at 4 percent in August 2025.
- Infrastructure and construction sectors grew by 10.6 percent.
- Government projects are crucial for stimulating growth.
New Delhi, Sep 29 (NationPress) The recent GST rationalisation is projected to enhance consumption demand during the festive period, which is expected to positively impact manufacturing output in September-October 2025, after the clearance of older stock, according to economists on Monday.
The IIP growth stood at 4 percent in August 2025. Mining output showed a year-on-year increase after a hiatus of four months, and electricity generation growth reached a five-month peak during the month.
"On the use-based side, output growth in primary goods improved to a seven-month high of 5.2 percent in August 2025, mirroring trends in mining and electricity generation, although the other five sub-segments experienced a decline in their growth performance compared to July 2025," stated ICRA's Chief Economist Aditi Nayar.
The infrastructure and construction sectors enjoyed a remarkable growth of 10.6 percent in August compared to the same month last year, driven by significant government projects in highways, railways, and ports.
Among the manufacturing sector, 10 out of 23 industry groups recorded positive growth in August this year compared to the same month of the previous year.
On the investment side, infrastructure and construction goods continued to show robust growth, rising by 10.6 percent. Public capital expenditure is sustaining investment momentum, while private capital expenditure remains tepid due to ongoing global uncertainties.
"Monitoring consumption trends will be crucial, with GST reforms expected to offer a vital boost to the demand landscape ahead of the festive season," remarked CareEdge Ratings' Chief Economist Rajani Sinha.
Additionally, reductions in income tax, lower food inflation, and RBI rate cuts create a favorable environment for consumption.
"In a challenging external climate, a recovery in domestic demand supported by these elements can stimulate private capital expenditure and bolster overall IIP growth moving forward," Sinha added.
Point of View
It is crucial to recognize the transformative potential of the GST rationalisation on manufacturing output. With a keen focus on economic recovery, this initiative presents an opportunity for revitalizing domestic demand, fostering investment, and ultimately supporting the nation's growth trajectory. The economic landscape is evolving, and with it, our approach must remain aligned with the principles of nation-building.
NationPress
29/09/2025
Frequently Asked Questions
What is GST rationalisation?
GST rationalisation refers to adjustments made to the Goods and Services Tax structure to enhance compliance and improve economic conditions, particularly by boosting consumption and investment.
How will GST rationalisation affect manufacturing output?
Economists believe that GST rationalisation will stimulate consumption demand, which is expected to positively impact manufacturing output during the festive season.
What other factors support consumption growth?
Factors such as income tax reductions, lower food inflation, and RBI rate cuts contribute to a conducive environment for increased consumer spending.
What was the IIP growth rate in August 2025?
The Index of Industrial Production (IIP) growth rate was recorded at 4 percent in August 2025.
Why is the infrastructure sector growing?
The infrastructure sector is experiencing growth due to large-scale government projects in highways, railways, and ports.
