GST Cut: A Festive Boost with Political Undertones

The landmark Goods and Services Tax (GST) reduction, effective September 22, is being projected as both sound economics and astute politics by the Narendra Modi government. Officials anticipate that the move will stimulate consumption, spur public spending, and enhance the Centre’s image among voters ahead of crucial state elections.

According to government sources, consumer spending is expected to surge this festive season, with the GST cut taking effect on the first day of Navratri, September 22—nearly a month before Diwali on October 20. Following the significant income tax relief announced in this year’s Union Budget, the GST reduction is being positioned as the second major financial relief for citizens in 2025. The timing, analysts note, places the Bharatiya Janata Party (BJP) in a favorable position as it prepares for electoral contests in Bihar, West Bengal, Assam, Kerala, and Tamil Nadu.

The government expedited the rollout after Prime Minister Narendra Modi, in his Independence Day address, described GST rationalisation as a “Diwali gift” to the people. Strategists, however, recognised the need to advance the implementation to ensure that consumers do not defer purchases in anticipation of price cuts closer to Diwali.

Under the revised structure, most essential goods now attract either 5 percent or zero GST, while medical and life insurance premiums are exempt. Life-saving drugs and a wide range of medicines have also been placed in lower tax brackets, a measure expected to provide direct relief to households.

Politically, the BJP is positioning the GST cut as a contrast to the Congress-led UPA era. Finance Minister Nirmala Sitharaman underscored this point, noting that “the UPA could never implement GST because states did not trust them.” She challenged the opposition, remarking: “Congress should prepare its mind—whether it has to support these cuts or oppose them.” The BJP believes that any criticism of the measure by the opposition could be interpreted as being against public welfare, strengthening its narrative ahead of the polls.

With the GST cut, the government not only places more money in the hands of the common man but also sets the stage for a festive season marked by buoyant consumption—an economic decision with clear political dividends.