GST rate cuts likely to ease inflation, boost growth, says FinMin report

Recent GST rate cuts will help lower inflation over the next year and also bring a further upside bias to the country's growth prospects, the Finance Ministry said in its monthly report.

However, "this is not the time to drop our guard. Uncertainties and risks persist," it said, adding that for now, the risks appear manageable, but they are there.

If tariff uncertainties persist, there will be an impact on export sectors, with spillover risk to domestic employment, income and consumption. The decision by the US government to impose a fee hike on new H1B visa-seekers is a reminder of the risks of trade uncertainties, affecting the hitherto unaffected services sector, the Finance Ministry said in its Monthly Economic Review.

The central government's reform agenda is expected to cushion the economy against the adverse effects of trade disruptions, it added.

"The near-term outlook, therefore, is characterised by steady, reform-driven growth rooted in macroeconomic discipline and adaptive economic diplomacy, with ongoing vigilance warranted against external shocks and global market volatility," the ministry said.