New Delhi, Oct. 19 -- The next-generation GST reforms have triggered a sharp reduction in consumer prices and accelerated a "virtuous cycle" of growth through consumption-led demand, Union finance minister Nirmala Sitharaman said on Saturday, and added that the government's monitoring of prices of 54 daily-use items shows the industry has passed on benefits to consumers. The GST Council on September 3 approved sweeping rate reductions on items spanning household essentials, medicines, automobiles and appliances as it pruned the tax structure from four slabs to essentially two. Estimated at the time to lead to a Rs.48,000 crore implication on the exchequer, the gamble appears to have worked with the government estimating consumption surging nearly 10% to add Rs.20 lakh crore in spending this year. "The government's move to reduce tax rates is primarily to ensure that the benefit of better collection reaches the common people," Sitharaman said at a joint press conference on what the government has called GST Bachat Utsav (GST savings festival) alongside commerce minister Piyush Goyal and information and broadcasting minister Ashwini Vaishnaw. The new rates came into force on September 22 after the GST Council's mandatory consent to a move that Prime Minister Narendra Modi promised to thepeople of the country duringhis Independence Day speech this year. The finance minister dismissed concerns that the consumption surge merely reflected pent-up demand, asserting the tax reduction would deliver sustained benefits. "Yes, it is going to benefit every consumer on a day-to-day basis. So, it will sustain. Consumption story will continue," she said. Sitharaman said tax rates have been reduced to pass on benefits of better collection-almost touching Rs.2 lakh crore monthly-to consumers on mostly day-to-day items, adding that the demand triggered by GST 2.0 would continue beyond the festive season. Goyal said the multiplier effect of the reforms was already visible in investment, business and industry, creating a surge in the economy and boosting consumer spending. Vaishnaw highlighted macroeconomic indicators showing the impact: out of India's Rs.335 lakh crore GDP last year, Rs.202 lakh crore came from consumption and Rs.98 lakh crore from investment. "This year consumption has increased by nearly 10%, reflecting an additional Rs.20 lakh crore in consumer spending. This increase is expected to drive a corresponding rise in investments, reinforcing the growth momentum," he said. Referring to Prime Minister Narendra Modi's Independence Day vision for GST 2.0, Sitharaman said rate reduction, process simplification, reducing slabs from four to two, and resolving classification issues had all been completed ahead of schedule. The reforms, which took effect from September 22 when Navratri began, slashed tax rates on nearly 375 items ranging from toothpaste to television sets. The new two-tier structure of 5% and 18%-plus a special 40% rate on ultra-luxury items-replaced the earlier four-slab framework of 5%, 12%, 18% and 28% with compensation cess on luxury and sin goods. Vaishnaw noted that India's electronics ecosystem, which has created over 2.5 million jobs, continues demonstrating strong fundamentals driven by record consumer demand, policy stability and a rapidly expanding manufacturing base. The finance minister said the "virtuous cycle" was clear: "Tax reduction leads to better consumption and greater demand, prompting businesses to increase capacity, thereby attracting investments." Two government officials, who asked not to be named, cited industry figures to back the contention of the consumption boost: India's automobile industry, for instance, recorded its best Navratri performance in a decade, with Maruti Suzuki doubling its sales from last year to deliver 165,000 cars in eight days, including a record 30,000 vehicles on Ashtami alone-the highest single-day figure in 35 years....