Prime Minister Narendra Modi has announced GST 2.0, promising lower tax rates on most goods and services. Economists believe this move will act as a “Diwali gift” by reducing the tax burden on citizens. The reforms are also expected to cool inflation further, creating space for the Reserve Bank of India (RBI) to ease monetary policy. With inflation under control, analysts suggest the RBI could announce a rate cut as early as October. Morgan Stanley has projected one more cut in the upcoming policy review. UBS also expects further easing, with the terminal repo rate likely to settle between 5–5.25%. The brokerage estimates a 25–50 basis points cut in FY26 to support growth. Lower interest rates will benefit businesses and consumers, boosting overall economic momentum. GST 2.0 thus marks a major policy shift combining tax relief and growth support. The coming months will be crucial to see how these reforms shape India’s economic outlook..
GST reform push strengthens case for October rate cut, say experts
