The GST New Rates, set to be implemented from September 22, are expected to boost consumption with and household goods getting cheaper ahead of the festive season. The Finance Minister Nirmala Sitharaman, in an exclusive interview with Financial Express, however questioned the lack of private investment. Making a point on government capex, she expressed hopes about private sector investment rising on the back of higher demand. 

The FM reiterated that the private sector had earlier had the problem of demand not going up, but with the GST reform, that concern is expected to be addressed. “A pick-up in demand will be obvious now, so hopefully they should come out (and invest more),” she added.

With GST reforms, demand concerns no longer valid: FM sitharaman

She pointed out, during the interview, that the private sector, which benefitted from corporate tax cuts back in 2019 as well did not invest enough. Sitharaman said, “At some point in time, I heard some of them (companies) say that they were not able to see demand going up, and that unless demand convincingly went up, they wouldn’t be able to invest and take a downside risk. But now, with the GST reforms, even that question should be answered.”

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Data indicates that the Indian companies are sitting on a cash pile of Rs 13.5 lakh crore, yet investments in Q1FY26 remained the lowest in several recent quarters. The Finance Minister pointed out that, “There is, however, a clear indication that more has to be done by the private sector, and the government can’t do the heavy lifting alone. You can, at best, nudge them, but at the end of the day, it’s a commercial decision.” 

GST reform to spark a consumption-driven growth cycle: Sitharaman

She also put the focus on the sweeping effect of the GST reform on India’s broader economic landscape in terms of fiscal stability, consumption, ease of doing business, etc.

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FM Sitharaman said, “Once people spend on consumption, demand will grow, industry will be tempted to increase capacity to produce more, and new investments will come in. Once more investments occur, more jobs will be created, and more people will get money in their hands, and the virtuous cycle will start moving.”

“All this will have a very strong impact on GDP growth. Of course, (GST cuts) are going to touch the lives of each and every one in this country,” she added.