Next 3 months buoyant for industry as GST rate cuts to boost activity: Report

New Delhi, Oct 29 (IANS) The next three months should be more buoyant for industry as the GST cuts would translate to higher demand which in turn should lead to increased activity, a new Bank of Baroda (BoB) report said on Wednesday.

The announcement of GST reforms clubbed with festive season is expected to boost consumption demand in the near term. This is likely to offset the ongoing uncertainty pertaining to the trade negotiations, the report mentioned.

IIP growth edged up to 4 per cent in September, compared with 3.2 per cent growth in September last year.

Manufacturing and electricity production improved significantly. Mining output was lower for the same period, partly can be attributed to rainfall. Within manufacturing, sectors such as computer, basic metals and electronic gathered pace and registered much higher growth.

“Growth in infra and consumer durable sector outshined in September. The GST rationalisation, early arrival of festive season along with lower inflation, signals the growing strength in the domestic economy, even as uncertainty remains in the global environment,” said Jahnavi Prabhakar, Economist, Bank of Baroda.

The ongoing reforms exhibit resilience in the economy as these indicators are expected to boost the production and support the growth momentum in H2 FY26, Prabhakar added.

Within manufacturing, 10 out of 23 sub-sectors registered faster pace of growth this year than previous year. These included, computer, electronics, basic metals, electrical equipment, wood products, motor vehicles, among others.

Within use-based classification, infrastructure and construction goods continued to register robust growth supported by government’s continued capex push.

The use-based classification shows a revival of durable goods which grew by 10.2 per cent over a relatively stable base of 6.3 per cent last year. This pick up can be attributed to companies scaling up output in preparation for the festival season following the GST reforms. The same holds for vehicles, said the report.

—IANS

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