Quick Summary
India could face a dual economic challenge as GST rate rationalisation and rising US tariffs threaten fiscal revenues and growth prospects, according to a recent HSBC report. The banking major estimates that a proposed rejig in GST slabs could cost the exchequer nearly Rs 1.43 lakh crore or 0.4% of
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FAQ :
The proposed rejig in GST slabs is estimated to cost the exchequer nearly Rs 1.43 lakh crore, which is equivalent to 0.4% of India's GDP.
The potential revenue loss from GST rate changes is likely to be split equally between the Central government and the State governments.
Without adequate compensation, states may have to cut critical expenditure, such as capital outlay, which could risk hindering growth momentum.
HSBC estimates that a 25% US tariff could lower India's growth by 0.3 percentage points, and a 50% tariff could drag growth by 0.7 percentage points.
Non-exempt items like jewellery, textiles, and food products, largely produced by labour-intensive small firms, could see demand disruptions due to US tariffs.
Indirect impacts could include deterring Foreign Direct Investment (FDI) inflows and corporate capital expenditure due to doubts over India's export competitiveness.
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