Finance Minister Nirmala Sitharaman has said that Corporate India can no longer cite "uncertain demand" as an excuse to hold back investments, as the sweeping GST cuts across more than 375 items are expected to trigger a long-lasting consumption boom.
In an interview, she stressed that the landmark GST reforms-effective from September 22-will not only lift demand but also support capital formation and fiscal stability. "Demand pick-up will be obvious now, so hopefully India Inc should come out and invest more," she said.
GST reforms to fuel demand and investment
The finance minister highlighted that many companies have been sitting on large cash reserves-estimated at Rs 13.5 lakh crore-yet fresh greenfield investments remain muted. In Q1FY26, private sector capex was among the lowest in recent quarters, with government-led spending driving GDP growth of 7.8%.
"With GST reforms in place, consumption will revive strongly. This should encourage the private sector to take on downside risks and expand," Sitharaman said, describing the move as a "people's reform" that will reduce household costs and boost aspirational purchases.
Monitoring banks, reforms and GST pass-through
The minister said she will hold a review meeting with public sector banks this week to discuss why lending rate cuts are not being adequately transmitted to borrowers despite monetary easing. "This time I may not leave it at market correction; I will be talking to banks and industry," she noted.
From September 22, Sitharaman will personally monitor whether businesses are passing on GST benefits to consumers. Inputs from MPs, industry associations and district-level reports will guide the government's engagement with firms that fail to transfer the relief. "Many sectors have already vowed to extend benefits, so the consumption revival won't be short-lived," she said.
She added that insurance companies should flag concerns about GST exemptions without input tax credit (ITC), which may have adverse implications compared to the current 18% tax with ITC availability.
Fiscal stance and compensation cess
On fiscal matters, Sitharaman reassured that the Centre's borrowing calendar remains unchanged despite revenue foregone from GST cuts. "That should reassure all. The RBI is releasing more liquidity into the system. Things will balance out," she said.
She categorically ruled out any extension of the GST compensation cess, calling it a "distortion" that had served its purpose. The cess, currently used to repay borrowings made during FY21 and FY22, will be phased out by 2025.
Global trade and market access
Amid easing tensions with China and speculation over relaxed FDI approvals, the finance minister said greater market access for Indian goods must be prioritised. "It has to be direct market access, and negotiations will have to take place," she said.
With GST 2.0 promising lower taxes on essentials, cheaper consumer goods, and clarity in product classification, the government expects not only an immediate splurge but also a sustained increase in consumption by early 2026-paving the way for private investment to follow.
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