The Modi government may have taken a giant sweep at kickstarting consumption among ordinary Indians through its GST reforms, but is it working at the ground level?
A nationwide survey shows that only a dismal 3 out of 10 consumers have confirmed that they received the GST cut enough.
In fact, even worse, just 1 out of 10 consumers said they received the full benefit of the reduction in GST rates, while 2 in 10 said they received just partial benefits.
What went wrong?
The whole thinking on the part of the government was that the GST slab revision and rate cuts, as well as the income tax cuts coming into effect from this financial year, would spark off a virtuous cycle of economic activity — lowered price leading to a revival of public consumption, which has been low for the last few years. As the public shopped and spent more, this would lead to the private sector making capital investment in additional capacity, resulting in better economic activity and eventually to even more consumption.
Online platforms continue to not pass #GSTratereduction benefits to consumers and brands are making limited or no efforts to ensure compliance even with large retailers.
— Sachin Taparia (@sachintaparia) September 26, 2025
Though #GSTrate on bottled water has reduced #Blinkit is not passing the benefit to the consumer. This will… https://t.co/Tm91Yx2usL pic.twitter.com/sBMxMy1TCh
The hope was that the entire process would help shore up the domestic economy in the face of global headwinds (read: Trump’s tariff tirade and any long term effect therein leading to a loss of international trade and in conjunction, scaling up of manufacturing), but on ground level after a whole week of the new tax cuts coming into force, there seem to be disappointing signals on the ground.
Reality check
The nationwide survey findings are based on responses from over 27,000 citizens spread across 322 districts across the country, conducted by the community social media platform LocalCircles. Nearly half the responses came from Tier 1 cities, which should be even more alarming news for the government, considering that they are supposed to propel the spending spree in a lot of ways, with the rest spread across Tiers 2,3,4, and even rural areas.
One of the common ruses includes shopkeepers telling consumers to wait till the products with packaging reflecting the new rates come into stock, though this goes against the government’s implicit instruction that only new rates will apply from September 22, even if the packaging mentions the old rates.
Perhaps the error here on the government’s part is that the permission it gave, after big consumer companies asked for it, was an allowance to let packed goods with old prices printed, to be sold until the end of this financial year, knowing fully well this could prompt small retailers to pull a fast one on unsuspecting customers.
Many retailers say they have not received a directive and a discount commitment from the brand or the distributor and stockists and do not even have the revised price lists.
LocalCircles also reported how it is not just small shopkeepers but big e-commerce giants, especially quick commerce players, who were not passing on the benefits of the tax cuts to consumers. In many cases, this is happening despite the big brands themselves, be it ITC, Amul, or Lever, having publicly announced that the cost of many of their products will be revised.
A statement issued by LocalCircles explained, “While the Government has brought in a very consumer-centric GST 2.0, post the first week, the full benefits are hardly reaching the consumers, except in the case of automobiles, where 7 in 10 who bought a vehicle this week confirmed receiving full benefit of the revised GST rate, while 2 in 10 confirmed receiving partial benefit.
In other categories like packaged foods and medicines, only 1 in 10 consumers surveyed confirmed receiving the full benefit of the GST rate reduction, while 2 in 10 received partial benefits. Things seem to be slightly better in the case of appliances like white goods and consumer electronics, with three in 10 consumers surveyed confirming receiving the full benefit of the GST rate reduction, while another three said they received only partial benefit.
In the case of FMCG products and medicines, brands need to do a lot more so that the last-mile retailer knows what to do. Clearly, doing this for such products is much more challenging as compared to automobiles or whitegoods, given the hundreds of thousands of retail points across the country where such products are sold.
The site has said that it will share the findings with the central government. The new Goods and Services Tax (GST) rates that came into effect earlier this month, from September 22, the first day of Navratri, have impacted the prices of a whole range of goods of everyday use, essentials to aspirational goods.
