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GST 2.0 and Its Impact on Economic Growth: A Structural and Macroeconomic Analysis

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  • P. Rajasekhar1

    (Academic Consultant, Department of Business Management, Y.V. University, Kadapa)

  • P. Sudheer Kumar

    (Academic Consultant, Department of Business Management, Y.V. University, Kadapa)

Abstract

By collapsing the five-tier structure into three slabs (5%, 18%, and 40%), the reform aims to reduce classification disputes and correct inverted duty structures. Using a mixed-method approach—combining secondary data (Q3–Q4 FY2025–26) with sectoral case studies in automobiles, FMCG, and healthcare—this study finds an initial fiscal gap of ₹45,000 crore offset by an 8.1% surge in monthly collections. Econometric projections suggest GST 2.0 contributed to India’s 7.3% GDP growth in FY2026, alongside lower inflation and improved MSME liquidity. Positioned within global VAT/GST experiences, India’s reform illustrates how simplification can stimulate consumption-led growth while raising challenges of fiscal federalism and sin-tax dependency.

Suggested Citation

  • P. Rajasekhar1 & P. Sudheer Kumar, 2026. "GST 2.0 and Its Impact on Economic Growth: A Structural and Macroeconomic Analysis," International Journal of Latest Technology in Engineering, Management & Applied Science, RSIS International, vol. 15(6), pages 1654-1661, July.
    • Handle: RePEc:bjf:ijltem:v:15:y:2026:i:6:a:2938
    DOI: 10.51583/IJLTEMAS.2026.150600114
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