Blank shot? Surveys hardly noticed any impact of GST rate cuts on consumer spending in India

The prices of various items such as footwear, clothing, consumer durables (such as air-conditioners and TV sets) and automobiles (cars, two-wheelers, etc) have fallen post-GST rationalization. Our calculations suggest that inflation in India’s GST-basket (weight of 17%) decelerated to 2.1% year-on-year in October 2025 and further to 1.8% in November from a stable 3% in the previous 14 months.

Core inflation excluding gold was at a record low of 2.5% year-on-year in November, down from 3% in August-September.The impact of GST rationalization, nonetheless, was expected to go far beyond lower inflation. It was supposed to put more money in the hands of consumers, addressing weak income growth, which was expected to convert into higher consumer spending and thus economic growth.

In the absence of high-frequency official data on income and spending, various consumer surveys act as a crucial bridge to gauge current perceptions of these two key variables. Announced on 3 September 2025, India’s GST rate cuts went into effect on 22 September.

According to the Reserve Bank of India’s (RBI) bi-monthly urban consumer confidence survey (UCCS) conducted over the first 10 days of November 2025, the proportion of respondents perceiving a (gross) rise in income and spending declined in comparison with findings of the same survey carried out from 28 August to 6 September. On a net basis (the share of respondents reporting more minus those expecting less, i.e., with those reporting ‘no change’ left out), while more respondents reported higher income in November (in line with the past trend), the share of respondents perceiving higher spending was the lowest in the past eight UCCS rounds.RBI’s Rural Consumer Confidence Survey (RCCS) also