How will GST reforms boost the Indian economy & employment? Explained.

The latest Goods and Services Tax (GST) reform, billed as the biggest overhaul since its introduction in 2017, has compressed the four existing tax slabs into two, a move that experts say will directly boost India’s economy and create new employment opportunities.

Rajib S Sahoo, financial expert and Chairman of the Indian Chamber of Commerce (ICC) in Odisha, said the timing of the reform is significant as India faces challenges in the international market, particularly in exports to the United States.

“This will boost domestic consumption, industrial output due to increased demand, and will give a cyclic cascading effect for improving employment, economic output, productivity, and GDP of the country. This will reduce the tax burden on the common man,” Sahoo stated.

Employment Generation and Industrial Growth

Sahoo underlined that India’s biggest challenge remains employment creation. “All industries that are labour-intensive must prosper faster to boost the employment sector,” he said. The benefits of higher demand and increased production are expected to stimulate job growth across sectors, including manufacturing, agriculture, and services.

Farmers and the agriculture sector, considered the backbone of the economy, are also expected to benefit as reforms reduce costs and spur rural demand.

The white goods industry, which depends on household consumption, is likely to see a revival due to nearly 10% tax cuts on several categories.

ALSO READ: GST reforms to directly benefit farmers, traders, middle-class: Odisha CM

Revenue Stability and Global Outlook

Explaining the government’s fiscal position, Sahoo said GST collections have tripled since 2017, rising from about Rs 75,000 crore per month to around Rs 2.2 lakh crore.

“The government is reciprocating by reducing the tax burden on society and taxpayers,” he added, noting that the reform would encourage higher compliance and trading volumes among businesses.

At a time when Indian exports to the US face uncertainty, Sahoo stressed that the country’s robust domestic market will help absorb external shocks. Alternate trade avenues with Russia, China, and other partners, alongside the recent reduction in crude oil prices, are expected to provide additional stability.

ALSO READ: Small cars, bikes up to 350 cc to get cheaper as GST reforms kick in

A Boost for the Middle Class and Traders

For the middle class, which Sahoo said has often felt overburdened, GST cuts of 7–13% on several commodities are expected to translate into substantial savings.

“Middle-class households will now be able to afford more, reinvest their savings, and support capital goods consumption,” he explained.

Traders and businessmen are also set to gain from higher transaction volumes. “They don’t make profit out of tax; they make profit out of the volume they sell,” Sahoo said, noting that lower tax rates would stimulate market activity across industries.

With the dual benefits of easing consumer costs and encouraging business growth, the reform is seen as a crucial step in propelling India toward its goal of becoming the world’s third-largest economy.