New Delhi, Sept. 29 -- Domestic private consumption picked up in the first half (H1) of fiscal year 2027, supported by credit growth, a lower goods and services tax (GST) burden and a robust rabi harvest, helping sustain discretionary spending in both urban and rural areas. While festive demand may support near-term momentum, experts caution that a weaker-than-expected kharif harvest and rising commodity prices could stymie the recovery in spending.

Last year's GST overhaul, which slashed the indirect tax on passenger vehicles, two-wheelers and premium consumer durables to 18% from 28%, unlocked pent-up demand across income groups, said Madan Sabnavis, chief economist at Bank of Baroda. Lower input-cost inflation also allowed companies t...